Warren J. Samuels
The Physiocratic Theory of Property and State *
Quarterly Journal of Economics, 75(1)
Feb. 1961, pp. 96-111
Economists have long interpreted the Physiocratic concept of the relation of the state to property as essentially the protection of private property. The thesis of this article is that the Physiocratic theory of property de facto valid, however doctrinal its advocacy of private property, is a theory of malleable property rights premised upon an utilitarian understanding of the social function of private property and necessarily involving the state in the continuing reconstitution of property rights.
There is no question that the “protection of property” interpretation is amply supported by the Physiocrats’ own statements. Their affection for private property as the dominant institutional form is clear: “Respect for property,” wrote Quesnay, “is the primary element of the power of society.” Schlatter paraphrases la Riviere:
It is from the right of property, maintained in all its natural and primitive fullness, that all the institutions which make up the essential form of society necessarily flow: you can think of the right of property as a tree, and all the institutions of society are the branches which it shoots forth, which it nourishes, and which perish when they are detached from it. 2
The fourth of Quesnay’s Mazime Generales thus declares:
That the ownership of the landed properties and the mobile wealth be assured to those who are their legitimate possessors; for THE SECURITY OF PROPERTY IS THE ESSENTIAL FUNDAMENTAL OF THE ECONOMIC ORDER OF SOCIETY. 3
Possessed of this view toward private property the Physiocrats were often equally explicit as to a desirable property-state relation-
* The author would like to acknowledge the assistance provided by the Bureau of Business and Economic Research at Georgia State College of Business Administration, and in particular by Dr. Willys R. Knight, Director.
1. Quoted in George John Malanos, The Evolution of the General Theory (Unpublished doctoral dissertation, Harvard, 1946), p. 45.
2. Richard Schiatter, Private Property: The History of an Idea (New Brunswick: Rutgers University Press, 1951), p. 217.
3. Auguste Oncken (ed.), Oeuvres Economiques et Philosophiques de F. Quesnay (Paris: Joseph Baer, 1888), p. 331.
ship. Having also held that “The social laws established by the Supreme Being prescribe only the preservation of the right of property, and of that liberty which is inseparable from it,” 4 du Pont inferred that, “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.” 5 This reflects the dictum of Quesnay that, “There is only the sovereign power which assures the proprietorship of the subjects…” 6
The “protection of private property” would thus seem demonstrated as the distinctive component of the Physiocratic theory of property-state relations. Private property would appear upheld as inviolable and indivisible, something not to be infringed. The Physiocrats were aware that interpersonal property claims are always in a process of adjudication, the state reconciling conflicts between private litigants, with a concomitant expansion of the law of property. 7 But what of the property-state relationship as it involved, not the conflicting claims of private interests, but conflicting private and public, or social, interests? Does the Physiocratic theory of property maintain or imply that the social interest is best served when, perhaps without substantial exception, private property rights are unrestrained and unabridged? Or does the Physiocratic theory of property encompass - and if so to what extent and by what criteria - an element of restriction on behalf of some definition of the social interest? We know that the Physiocrats “accepted” private property, but was the state to be only a gendarme in its protection?
Three explanations of private property are recognized in the literature on Physiocracy: private property as (a) an object of divine will, (b) a manifestation of the natural order, and (c) derived from
4. Quoted in John Herman Randall, Jr., The Making of the Modern Mind (Boston: Houghton Mifflin, 1926), p. 324.
5. Quoted in Charles Gide and Charles Rist, A History
of Economic Doctrines (
6. Oncken, op. cit., p. 332.
7. “All property,” reads du Pont’s necrologue, “is bound by the surrounding properties as all liberty by other liberties. They press together but are still separate as the cells of a honeycomb.” Further, “Yet the respect for liberty and proprietorship requires that men and capitalists live completely [free] from any masters in the usage of their advances and their time, provided that the results of it neither hinder liberty nor damage the proprietorship of anyone.” (Ibid., pp. 803, 804.)
the application of labor. In each case private property is postulated as given and independent of the volition of man.
Yet a fourth, less absolutist, justification of private property is also present. This may be called the “instrumental,” for it maintains that private property is not only right but also expedient. Emphasis upon private property as a means rather than as something given or ordained pervades the Physiocrats’ writings in two contexts.
First, it is contended that the harmony of interests is to be effectuated through the institution of private property. The logic involves an equation of individual and social interests, the social interest being consonant with the sum total of individual interests when, ceteris paribus, individual interests are effectuated and secured with private property. Private property rights are defended as instrumental in securing private interests and in attaining the harmony of interests – “... the unity of social interests and its conformity with the law of justice.... “(Letrosne). 8 Hence the proposition that “Individual interest is the primary bond of society, which will be the more solid in proportion as private interest is secure,” 9 is the basis for holding that “freedom in exchange, an absolutely unshackled use of the wealth of individuals, could not be dissociated from the full enjoyment of the rights of private property.” 1
Second, private property rights are justified on the equally utilitarian ground that private property stimulates and facilitates the production and accumulation of wealth, i.e., economic welfare. Private property becomes the foundation of the natural order “most essential” and “most advantageous” to the human race because it is so functional. 2 When Quesnay argues that “the security of property
8. R. H. Palgrave (ed.), Dictionary of Political Economy (London: Macmillan, 1908), II, 598.
9. Ibid., III, 105.
1. Ibid., II, 148.
2. Taken from the title of la
“Positive legislation consists, then,” says Quesnay, “in the enunciation of the natural laws which make up the order obviously the most advantageous possible for men in society:...” (K. W. Kapp and L. L. Kapp, Readings in Economics (New York: Barnes and Noble, 1949), pp. 100, 101). See also Nicolas Baudeau, Premiere Introduction a la Philosophie Economique (Paris: Librairie Paul Geuthner, 1910), p. 31.
is the fundamental essential of the economic order of society,” the reason he advances for its necessity is that,
Without the certainty of ownership, the territory would rest uncultivated. There would be neither proprietors nor tenants responsible for making the necessary expenditures to develop and cultivate it, if the preservation of the land and produce were not assured to those who advance these expenditures. It is the security of permanent possession which induces the work and the employment of wealth to the improvement and to the cultivation of land and to the enterprises of commerce and industry. 3
La Riviere is equally explicit in propounding this instrumental justification of private property:
The greatest possible happiness of the community as a whole consists in the greatest possible abundance of useful goods and in the greatest possible liberty to make use of these goods. I have made it clear that this maximum of enjoyment is the necessary consequence of the establishment of the right of property and that it is only by establishing this right that we are able to attain happiness. 4
In contrast, then, with the three conventionally recognized theories, the instrumental theory is utilitarian in its appeal for acceptance; for private property is functional in use and its benevolent efficacy - given the ends defined above - serves as its own justification. Private property as an institution becomes a means subject to discretionary value criteria. The former theories serve as mandatory criteria for the state, which would have to “maintain” or “protect” private property. Other than the adjudicatory function, nothing further can be inferred. The instrumental theory, however, suggests that the substance of private property rights, nominally the essence of the property-state relationship, may be malleable. Private property as an institution is advanced as desirable on functional grounds; it seems reasonable to infer that the state would have justification for altering the dimensions or substance of property rights should the harmony of interests for some reason not be achieved or should there be some obstacle to the attainment of the wealth and happiness of the populace and the nation. While private property would be the desired form of property arrangement, the actual construction of the institution would seem subject to the same criterion as applied to the adoption of private property itself, namely, a strictly utilitarian one, and as such subject to change.
The recognition of the instrumental role of private property would warrant the question: what was the social claim on private
3. Oneken, op. cit., pp. 331-32.
4. P. C. Newman, A. D. Gayer, and M. H. Spencer, Source Readings in Economic Thought (New York: Norton, 1954), p. 103.
property? If the state does not merely “protect” private property, what are the other dimensions to the property-state relationship?
Private ownership was to be de juro the accepted form of property rights, and the duty of the state was here to protect property. But Physiocratic property theory also encompassed the reasoned modification-reconstitution of such rights as necessary to maintain and strengthen the same social interest by which private property itself was sanctioned. The evidence recorded below suggests that the Physiocratic theory of property rights is more nearly a theory of “social utility” than a theory of exclusive or absolute private dominium. Such a view was propounded by de Tocqueville, when he observed that the Physiocrats had neither concern nor respect for contractual and proprietary rights. Such claims are minor, compared with the social interest: “there are no longer private rights, but only a public utility.”5 With respect to property, the role of the state was thus seen as an active manipulator, rather than a passive securer. 6
5. Alexis de Tocqueville, The Old Regime and the French Revolution (Garden City: Doubleday Anchor, 1955), p. 159. (See also the French edition, published by Librairie Gallimard, 1952, I, 210.) Mario Binaudi, The Physiocratic Doctrine of Judicial Control (Cambridge: Harvard University Press, 1938), p.3.
6. Schlatter cites Baudeau’s view that, “it is a common error to attribute property to the civil law.” (Op. cit., p. 217.) The inference that private property exists prior and pre-eminent to civil law reflects Lord Acton’s dictum that, “Society secures rights; it neither bestows nor restricts them.” (Quoted in Paschal Larkin, Property in the Eighteenth Century (Dublin: Cork University Press, 1930), p. 198.) Turgot, however, agreeing “that labour gave a natural title to property,” added, says Schlatter, that “in the state of nature property in land lasted only so long as the appropriator continued to occupy and cultivate: permanent property in land was a creation of the civil law.” (P. 217; see infra, footnote 4, p. 104.) Larkin found another qualification by the Physiocrats, that “Every individual has a natural right to at least those things which are necessary for his welfare.” (P. 200.) Quesnay also qualified the general rule by noting that “the strong can unjustly employ violence upon the weak,” by “the condition that he injure neither himself nor others,” and by recognizing differential “circumstances.” (Kapp and Kapp, op. cit., pp. 97, 99.)
(These are the same qualifications propounded by Locke
himself. Locke qualifies his
explanation of property in the natural state (On Civil Government,
paragraphs 26, 27, 28, 29, 32, 33) by assuming abundance (paragraphs 33, 36)
and the use of the qualifying phrase, “As much as anyone can make use of”
(paragraphs 31, 36). Civil society
is also differentiated from the state of nature. See Larkin, op. cit., pp. 50-64,
Schiatter concludes that: “These civil extensions of the right of property were justified by their general utility, but they should be revised whenever they conflict with the original right of nature.” (P. 217.) “Thus the privileges of the aristocracy, he advised the king, are civil rights which deprive others of their natural right to enjoy the produce of their own industry: these privileges ought, consequently, to be suppressed.” On the distinction between feudal rights as privileges or legitimate property, see Larkin, pp. 213 ff. [HHC - this last paragraph appears on page 101]
(1) Foundations: The two administrations of public office by Turgot, together with the large body of his writings both public and private, provide us with much serious insight into the social character of private property as understood by an important member of the Physiocratic group.7 One of the most striking examples concerns Turgot’s attitude towards “foundations,” an attitude comparable to the Anglo-Saxon law of perpetuities. Turgot argues that the governmerit has an “incontestable right. . . to dispose of old foundations, to extend their funds to new objects, or, better still, to suppress them altogether. Public utility is the supreme law, and it ought not to be nullified by any superstitious respect for what we call the intention of the founder - as if ignorant and short-sighted individuals had the right to chain to their capricious wills the generations that had still to be borne.”8 When private right or private interest is not coincident with social interest, then “public utility is the supreme law.”
(2) Famine Relief: Another notable example relates to Turgot’s pragmatic program for the relief of the depression engendered by the severe famines of 1769 and 1770, during his Intendency in the Generality of Limoges. Turgot was responsible for (a) the imposition of a voluntary charitable assessment, which was supplemented by (b) a compulsory tax, to finance (c) a system of useful public works. Furthermore he required (d) the compulsory maintenance and provision of the cultivators and their families by the employer-landlords, and (e) even went so far as to regulate and recalculate the grain rents, and (f) abrogate the privileges of the bakers of Limoges.
That Turgot employed his powers of governance to modify the rights of privilege and property is clear. Turgot wrote in his report that “It has been necessary for the public authority to require the
7. While not a Physiocrat in every doctrinal respect, Turgot’s association with the group is reasonably close; moreover, his attitude towards governmentally induced social change and social reconstruction does parallel the general Physiocratic view in almost every respect. Turgot may have been “more of a fellow-traveler... than a Physiocrat pur,” but he is also the only major Physiocrat providing the historical analyst with practical experience as a source of insight. (Ronald L. Meek, “The Physiocratic Concept of Profit,” Economica, N.S. XXVI (Feb., 1959), 52.)
8. W; Walker Stephens (ed.), The Life and Writings of Turgot (New York: Longmans, Green, 1895), pp. 227—28.
proprietors and inhabitants in better circumstances in each parish to assess themselves for the relief of the poor...” Anticipating the principle of “social fault yet private responsibility” of present-day unemployment compensation, he argued that “The labourers must find resources in the advances from, or in the gratuitous assistance of, their masters, who owe to them this support not less on the score of charity than on that of justice, and as landlords, for their own interest, rightly understood.” Thus by ordinance he proclaimed:
For these causes we order that the proprietors of domains, of whatever quality or condition they may be, privileged or not privileged, shall be held to keep and to maintain, until the next harvest, the labourers whom they had on October 1 last, as well as their families, men, women, and children. 9
Moreover, when the landlords demanded payment of the metayers’ rent in grain, as originally contracted, or the money value thereof at the existing market famine-price, Turgot intervened. Although “The landlords were requiring no more than their legal right, and they upheld the principle of the inviolability of contract,”1 Turgot persuaded the Parliament of Bordeaux to sanction a recalculation of the grain rents in terms of an earlier, somewhat lower, price. In a letter to the Chancellor, Turgot justified his course of action:
In times of scarcity it is humane, and even just, to bring the law to the assistance of the overburdened tenant. The proprietor whom the scarcity enriches cannot, without showing most odious greed, attempt to draw, from the cruel circumstances in which his tenant is now placed, a profit still more exorbitant than before. 2
(3) Guilds: Turgot’s Edict suppressing the guilds - consonant with the general Physiocratic program of reform - is well known as part of Turgot’s endeavor to rid commerce of the burden of the many restrictions then imposed upon it. But the significance of the Edict for the Physiocratic theory of property is less well appreciated.
Seguier, challenging the principle of the Edict before the Parliament of Paris, “contended, and with much force, that the masterships were items of property which had been purchased; that to abolish the guilds, rather than to reform them, meant nothing less than to confiscate the property of innocent purchasers.” Furthermore, said Seguier, “To give to all your subjects indiscriminately the right to hold a store or to open a shop is to violate the property of the masters,
9. Ibid., pp. 50, 53, 54.
1. Ibid., p. 51.
2. Ibid., p. 54.
3. R. P. Shepherd, Turgot and the Six Edicts, Columbia University, Series in History, Economics and Public Law (New York 1903), XVIII, 131.
who compose the communities.” 4 Turgot’s response is characterized by Shepherd as that of a “minister who saw not tradition but the future; who felt that justice to the many demanded injustice to the few who exploited the many.” Hence valuable property rights were, by the Edict, to be done away with, or at least seriously modified. This was the case and it was recognized as such.
(4) Economic Stability: It is now well recognized in the literature that several of the Physiocrats were solicitous lest an improper pattern or an inadequate volume of spending impede the maximization of the net product and thereby national prosperity. 6 Of the specific policies proposed by Quesnay, the regulation of interest rates for the purpose of insuring an adequate flow of capital to agriculture is also well known, as is also the strenuous objection raised by Turgot, du Pont and Letrosne (vis-a~vis Mirabeau, who concurred with Quesnay). But the fact nonetheless remains that Quesnay not alone accepted such restriction of property rights as is involved in interest-rate regulation. Even more striking are several other proposals of Quesnay having as their purpose the modification of property rights for the objective of protecting the social interest in the processes of circulation and reproduction.
Du Pont, in a letter to Turgot, urged the view that “the formation of capitals arises much less from saving out of the expenditure of revenues than from the wise employment of the expenditures.” 7 Thus Quesnay devoted two Maximes to public policy both compensatory and promotional toward the proper pattern and magnitude of expenditures:
That the government be less occupied with economies than with the operations necessary for the prosperity of the kingdom….
That the economic government occupy itself only in favoring the productive outlays and the commerce of agricultural commodities, and that it leave alone the sterile outlays .8
4. Stephens, op. cit., p. 134.
5. Shepherd, op. cit., p. 131.
6. J. J. Spengler, “The Physiocrats and Say’s Law of Markets,” I—II, Journal of Political Economy, LIII (Sept. and Dec. 1945), 193-211, 317-47, esp. 204-11,317-29, 345-47; Henri Woog, The Tableau Econornique of Francois Quesnay (Bern: A. Francke, 1950), pp. 22-25,82-98 (“The ‘Tableau Economique’ in Disequilibrium”); Leo Rogin, The Meaning and Validity of Economic Theory (New York: Harper, 1956), pp. 23-24, 29; Joseph A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), p. 287; A. R. J. Turgot, Reflections on the Formation and the Distribution of Riches (New York: Macmillan, 1922), p. ix; Edmund Whittaker, Schools and Streams of Economic Thought (Chicago: Rand McNally, 1960), p. 95.
7. Turgot, loc. cit.
8.Oncken, op. cit., pp. 336, 333.
Both fiscal and monetary policies are contemplated by Quesnay. Immediately after stating and reiterating the need to emphasize agricultural (via-a-vis manufacturing and luxury) production as the foundation of a prosperous economy, Quesnay offers, in italics no less, two rather astounding but concrete restrictions on the use of property, restrictions suggestive no doubt of how he would further minimize the problem of “sterile hoarding.” Says Quesnay:
That a part of the sum of incomes not pass to a foreign country without returning, in money or in merchandise.
That they prevent [evite] the desertion of inhabitants who would carry their wealth out of the kingdom.9
As with hoarding, “Money,” it would seem, “is strictly speaking, a public utility,” as Rogin has postulated;1 or, in Schumpeter’s words, unspent saving is “a sort of public enemy.” 2
Nor is that all, for Quesnay’s often-cited maxim on “the complete freedom of commerce” is preceded by two maxims which modify such freedom by requiring, in effect, that there be no social loss in foreign trade - perhaps another reversion to currency and, also, to import-export controls. 3
It is clear that these controls, having as their objective the promotion of the social interest in national economic prosperity, would have necessarily involved to some direct and indirect extent (as do their modern counterparts) the modification of the rights of private property. Individually and in their totality these modifications would have constituted a social claim on private property. Conversely, it is again evident that the uninterfered-with use of private property was, in the minds of the Physiocrats, contingent upon the consonance of that use with the requirements of justice and the prosperity of the system, as defined by them. 4
9.Ibid., p. 333.
1.Rogin, op. cit., p. 23.
2. Schumpeter, op. cit., p. 287.
3. Oncken, op. cit., p. 336.
4. Spengler points out that “Among the economic principles to which the physiocrats subscribed were these three: (a) the institution of private property is essential, at all times and in all places, to the well-being and development of societies; (b) complete economic liberty - freedom of exchange, of entry, and of competition - is prerequisite to the maximization of effort and conducive to the private and the public interest; (c) activity and policy directed to the maximization of the net product are necessary to, and consistent with, the maximization of the collective welfare.” He notes that critics “have pointed out that principle c is not universally consistent with principle b; that pursuit of principle c must eventually involve conflict with, and sacrifice of, principle b and its corollary, principle a.” “Were the pursuit of principle b to run counter to that of principle c,
[it is said, Quesnay would have sacrificed principle b to principle c, even to the extent of supporting state intervention in favor of agriculture.” But, the critics agree, Quesnay’s disciples “other than Mirabeau, who subscribed without qualification to Quesnay’s views, assigned primacy to principles a and b. These disciples of Quesnay, in event of conflict between principles c and b, would have subordinated the pursuit of principle c to that of the overriding principle b, it is inferred.” This characterization of Quesnay’s position is consonant with the position taken here. Spengler’s final comment aim supports the present thesis: “At most, supposing principle bwere subordinated to principle c, consumer sovereignty would be more restricted.” (Op. cit., pp. 328, 329.) Restricted, that is, in the use of their property: Quesnay is quite clear in proscribing unproductive consumption (manufacturing and luxury expenditures) and hoarding. See thicken, op. cit., maxims VII, VIII, IX, XXI, XXII, pp. 332-35.
A related point concerns the accountability of the landlords for the use of their property, primarily the lands capable of cultivation, as stewards of society. Quesnay accepted a feudal class structure, but he had his reservations and doubts over the efficacy of “the dependence of the current process of production on the financial resources of the landed class.” (Woog, op. cit., p. 19.) Says James Bonar:
“... the land should be allowed to become property not only because men have worked on it, but in order that they may have the motive to go on working upon it.” But he continued, “This tacitly implies that, if they do not work upon it, their title is pro tante insecure, and the State would not be bound to treat them as absolute masters of their land. But the existence of proprietorship without work is certainly tolerated by the Physiocrats.” (Philosophy and Political Economy (New York: Macmillan, 1909), p. 143.)
Spengler also concludes that the Physiocrats held the proprietors and cultivators should maintain the annual reproduction and net product, as well as “the continued augmentation of advances until net product has been raised to the attainable maximum,” i.e., that they were “morally responsible, each within his own sphere” and that such conduct was considered “meritorious”; but that such behavior was not “obligatory.” (Op. cit., pp. 208-9.) Whether a Physiocratic regime would have imposed sanctions toward such a goal is speculative and unanswerable. It must be remembered, however, that under the ancien regime there was “confiscated the whole local property of an owner who left his land derelict.” (Woog, op. cit., p. 13.) There would no doubt have been a schism of opinion among the Physiocrats. ] [HHC - bracketed section displayed on p.105 of the original]
(5) Taxation: A priori it would be expected that any theory of property-state relations characterized by the “protection of property” formulation would have as concomitant views that (a) taxes are intrinsically inimical to private property, (b) spending is generally best when done by private hands, and (c) taxes (and the cost of government), being essentially sterile, should therefore be minimized. One would expect an attitude thoroughly condescending and repugnant to taxation, in which the necessity for some compulsory contribution to government would be but grudgingly acknowledged. It will be found, however, that for a group presumably holding private property sacred and inviolable, the Physiocrats are not unduly hostile to taxation per se; rather they attribute to taxation (and government) considerable positive social significance.
The impot unique was proposed by Quesnay as a means of protecting the agricultural advances and thereby the prosperity of the nation. Quesnay also warns “That taxation not be destructive, or disproportionate to the total income of the nation;…. otherwise the tax degenerates into spoilation and causes a dwindling away which quickly ruins a state.” 5 This emphasis upon the destructive potential of taxation is reiterated throughout the writings of the Physiocrats. But concentration upon such destructive potential would be, however, a demonstrably inadequate characterization of the Physiocratic attitude toward taxation. Beyond this manifest concern over the proper magnitude and form of taxation, the Physiocrats had a pervasive solicitude for what may be called the constructive facet of taxation and public expenditures. Taxation becomes less of a nemesis and more of an instrument of social utility. Indeed, L. Einaudi expresses as a principle of Physiocratic tax theory that:
Tax, if kept within its rational limits, is not a burden at all. On the contrary, is a condition toward the maximization of the national dividend.
The object of taxation is “that part of the national dividend which is the necessary remuneration of the political class.” “.... in an orderly, progressive society the national dividend reaches a maximum when a sufficient quota is devoted to the maintenance of the political governing class,” for “we see that tax is born out of its very utility.” There is no burden, “because it is the fruit of the work done by the political class, acting either individually or collectively, through the agency of the State.” According to L. Einaudi, then, taxation for the Physiocrats was “a problem not of a burden laid on individual producer’s shoulders for the sake of keeping the consumptive governmental machine going, but... a problem of distribution between productive agents - the State being counted among them according to his (its) proper nature - of a total national dividend produced by the same agents.” 6
This interpretation of L. Einaudi is supported not only by La Riviere and du Pont, both of whom are cited by him, but also by Bandeau, 7 Quesnay and Turgot. Maxim XXVII reads in full:
That the government be less occupied with economies than with the operations necessary for the prosperity of the kingdom; for very great expenses can cease to be excessive by the augmentation of wealth. But it must not confound the excesses with the
5 .Oncken, op. cit., p. 332; see also pp. 337-41.
6. Luigi Einaudi, “The Physiocratic Theory of Taxation,” in Economic Essays in Honour of Gustav Cassel (London: George Allen & Unwin, 1933), pp. 131-35.
7.Baudeau, loc. cit.
simple expenses; for the excesses would be able to swallow up all the wealth of the nation and sovereign. 8
So also says Turgot:
If the realm becomes generally more wealthy, if there is
more money, more capital, and greater activity in industry and trade, all the
king’s expenses will increase proportionately. Everything is dearer in
Also relevant is Quesnay’s dictum that “...the sovereign power which assures the proprietorship of the subjects... has a primitive right in the division of the fruits of the land...” 1
8. Oncken, op. cit., p.336.
9. Shepherd, op. cit., p. 99. “As for government expenditures,” says Shepherd, “Turgot held that there was a direct connection between governmental expenses and public prosperity. He did not question that as the economic development of the state required enlarged expenditure by the government, the taxes to meet growing needs would be more and more easily borne by the people. He had public and private expenditure so closely allied that he could consider no increase of the budget allowable, except in case of dire necessity, until the indebtedness of the state was in process of liquidation.” (P. 138.)
1.Oncken, op. cit., p. 332. See also Gide and Blat: “...the Physiocrats argued that taxes ought to be paid liberally, and not grudgingly,...” (Op. cit., p. 38.) The fact that “the public authority must also incur some expense, which might be designated avances souveraines,” (Baudeau) is one justification. (Loc. cit.) As Spengler notes, the sovereign becomes “a co-proprietor.” What was transferred to the sovereign, consistently with the principles of the natural order, was not really a tax, therefore, but only his share. Moreover, this share had not really been the possession of the existing land-owning class; it had not been bequeathed or sold.” (Op. cit., p. 211.) Said du Pont: “The tax is a kind of inalienable common property. When proprietors buy or sell land they do not buy and sell the tax. They can only dispose of that portion of the land which really belongs to them, after deducting the amount of the tax. This tax is no more a charge upon property than is the right of fellow proprietors a burden upon one’s property. And so the public revenue is not burdensome to anyone, costs nothing, and is paid by no one. Hence, it in no way curtails the amount of property which a person has.” (Quoted in Gide and Blat, op. cit., p. 40.) This can only be the case if, as L Einaudi argues, the state is one of the “agents” of production. Thus Baudeau “recognized the advisability of periodical revaluations ‘in order that the sovereign power should always share in both the profits and the losses of the producer.’ And he addresses this important caution to the proprietors: ‘Take no credit to yourselves for the increase in the revenue of land. The thanks are really due to the growing efficiency of the sovereign authority” (Gide and Blat, op. cit., p. 40.)
As Gide and Blat note, the percentage limitation “affords a barrier against the autocracy of the sovereign - a barrier that is much more effective than a parliamentary vote.” (P. 44.) But - and this is very important for property theory - they also state that, “There is no mention of representation as a corollary of taxation. This form of guarantee, which marks the beginnings of
* [Parliamentary government,” and which involve the doctrine of consent (or at least implied consent) so intrinsic to conservative property theory, “could have no real significance for the Physiocrats.” (P. 35.) Said du Pont in a letter to Say: “it is a narrow and churlish English idea which decree. that an annual sum should be annually voted to the Government, and that Parliament should reserve to itself the right of refusing this tax.” (P. 88.)] * HHC – [bracketed] portion displayed on page 108 of the original.
It is also clear that the reconstruction of the tax system proposed by the Physiocrats would have necessarily involved the abrogation of valuable and privileged property rights of long standing. The impot unique is proposed not only on grounds of efficiency but also “Because (indirect taxation) is a disproportionate burden on the poor consumer,” a rich man’s consumption not being proportionate to his greater wealth. 2 Moreover, “The expenses of the government having for their object the interests of all, all ought to contribute to them; and the more one enjoys the advantages of the society, the more ought it to be held a matter of honor to participate in these charges.” 3 Taxation being subject to considerations of public utility, privilege would have to give way to a rational tax administration. That such a reconstruction involved a concomitant reconstitution of property rights 4 goes without saying. As with the impot unique, so with the corvee: the rights of privilege and exemption were to be abrogated. Such a revolution was involved in Turgot’s plan to replace the corvee with a direct money tax on the real beneficiaries (“It is then the class of proprietors of land which receives the fruit of the construction of roads; it is that class which ought alone to make the necessary advances, since they finally secure the benefits.”) 5 that the Parliament of Paris refused to register the Edict for the suppression of the corvee because, in its own words,
this suppression would be against justice. The first rule of justice is to preserve to every one what belongs to him: this rule consists, not only in preserving the rights of property, but still more in preserving those belonging to the person, which arise from the prerogative of birth and positions. 6
In the later development of American economic policy the same issue was to be formulated in terms, of a juxtaposition of the two due process clauses to the national commerce and tax powers and the state police power. For the Physiocrats, with respect to both guild and corvee reform, a change in policy and of the system involved what was correctly considered a reconstitution of the rights of prop
2. Stephens, op. cit., p. 320.
3. Quoted in Shepherd, op. cit., p. 108.
4. For example, the right of exemption from taxes was an object of purchase and sale, a valuable property right indeed. Ibid., pp. 108-9.
5. Ibid., p. 152.
6. Stephens, op. cit., pp. 132-33.
erty, differences of opinion arising over what best served the “social interest.” A similar position was taken, it should be noted, by Quesnay with respect to “abolishing or moderating the excessive rights of rivers and tolls...” “those to whom these rights belong will be sufficiently compensated by their part of the general increase in the incomes from the lands of the kingdom.”7 Privileges, vested interests, and property rights disturbed by reform in the public interest were thus to be compensated only by the resultant general prosperity.
While it was intrinsic, then, to Physiocratic thought that taxation not be destructive and uneconomical, it is also characteristic of Physiocrats thought that taxation (and therefore tax reform) is a matter of public utility not to be subjugated to any priority of private property rights. Taxation and private property itself were envisioned as instruments of social utility.
To the Physiocrats, private property was the accepted, indeed cherished, form of institutionalized ownership. They frequently couched their justification of private property in mandatory, superhuman sanctions, embodied in a theory of apparently absolute individual dominium. Viewed thusly, the Physiocratic theory would appear to involve the state in the simple protection of private property.
The foregoing analysis reveals, however, that the Physiocrats also endeavored to justify the institution on functional grounds, reducing the institutionalization of ownership to the domain of human volition and to the service of discretionary ends and values. Physiocratic thought both theoretically and practically, implicitly and explicitly, evidences a departure from the theory of individual dominium. While the dominium theory served as doctrine, Physiocratic thought and program belies the adoption de facto of a “bundle-of-rights” theory of property.
The character of property, as operationally understood by the Physiocrats, was such that the positive parameters and composition of all property, and of the dimensions of the rights of any given property, were all determined by and through the state and reworked in accordance with their conception of the social interest. Property rights thus took the form of a summation or bundle of rights, which
7. Oncken, op. cit., p. 241
did not exist in a vacuum in some predetermined absolute form, but were extant in reference to the functional requirements of their proposed Royaume Agricole. There were no rights independent of state law; there was no operationally definable quantum of rights extant in the Physiocratic literature that persists beyond the scope of lawmaking by the state. In a word, property rights are malleable, and the social claim on private property is manifest through changes in the bundle of rights, such changes presumably justified by the public interest - the law of social utility.
The Physiocratic social claim on private property has the following major dimensions: the application of the police power as conventionally understood, and the implementation of the Physiocratic programs of social construction, economic development and economic stability. The ultimate sources of such property-state relationship include: (a) the vestiges of a feudal conception of property, with the sovereign conceived as coproprietor of property and economy, coupled with the Physiocratic theory of a paternal, absolute (albeit benign) sovereign; (b) more important, operationally at least, their equating of the natural order not with the status quo but with the ideal with the consequent program of social change and reconstruction along the lines of the ideal through the agency of the sovereign, i.e., the state; and (c) the recognition that the presumed harmony of interests, if it was to be realized, had to be attained (and disharmonies and obstacles precluded) through the agency of the state, especially (but not only) for the maximization of the produit net and the proper functioning of the processes of circulation and reproduction.
All these considerations support the recognition of the de facto alteration of the fabric of property rights. There is no question but that the divesting of property rights (vested interests) through the focusing and refocusing of economic activity through state action is tantamount not to the protection of property in the abstract but to the material remaking of property and property rights. For the Physiocrats it was axiomatic that the state was responsible for the development of property, that it was through the agency of the state that property was to be reconstructed continuously in the social interest. The role of the state was thus to manipulate property law, thereby manipulating the bundle of rights that constituted property. From the perspective of the individual holder of property, the uninterfered-with use of private property was contingent upon the consonance of that use with the public interest as defined by the state. The concept of social function was thus correlative to that
of private right, and for practical purposes the former would govern the latter. 8
8. Compare R.. H. Tawney, The Acquisitive Socie4y (New York: Harcourt, Brace, 1920), Chaps. II and III. Given the recognition of these manipulations, “their philosophies would have permitted and would even have compelled them to regard” them “as ordained by Nature.” (0. H. Taylor, Economics and Liberalism (Cambridge: Harvard University Press, 1955), p. 99. As Spengler notes, even “Dubois admits that if it could have been proved to Quesnay that legislation (e.g., tariffs) would increase the net products he might have found such intervention to conform to the natural order.” (Op. cit., p. 328.)