In Defense of Jacque Turgot’s Actions During His Tenure as Minister of Finance

 

In a Politico article that seemed to be more about promoting interventionist government policies than it was about honestly explaining history or economics, Professor Jacob Soll of the University of Southern California recently made a hackneyed comparison between now former Prime Minister of the U.K. Liz Truss’s proposed tax reform that has since been largely reversed and the decision of 1775 France’s Minister of Finance, Jacque Turgot, to liberalize the economy with regards to grain trading and the events of the Flour War that same year which were ostensibly created by his actions. The fact that markets were “reeling” from Truss’s diabolical plan to lower the U.K.’s top income tax rate bracket from 45% to 40% is rather cynically compared to the real hardship that occurred in France in 1775. Whether the former is even the actual cause of Britain’s current problems is a very contested theory, as the expansionary monetary policy, high taxes, and large budget deficits of the last decade under Conservative Party rule seem to indicate, but that is a topic for another day. What matters here is showing how Dr. Soll was exploiting a historical tragedy in order to try and justify his opposition to the unhampered market economy, as well as to show how much of these events would have happened with or without Turgot’s liberalization measures and how pursuing on with them actually could have saved France a lot of the trouble with food problems that they would later face with the French Revolution.

After going over Turgot’s history and demonstrating a number of his interventionist actions and beliefs that one would think would make him endearing to the author, Dr. Soll finally gets to the point of the article and argues that France’s lack of government control is what lead to riots and famine in 1775. To be specific, Soll opposes Turgot’s decision upon his appointment in 1774 to abolish subsidies for, price controls on, and government-owned storehouses of grain and his ending of bread distribution for the poor. While these actions may certainly seem to be swift and severe politically, it is not enough to say that these actions alone caused the Flour War, nor that maintaining the old system would have prevented those events. As Soll himself acknowledges, the harvest of 1774 was already a bad one, so even with an omnipotent government controlling the grain trade, there was going to be no way to increase the physical output of grain going to the French citizenry and that was going to create problems for French society either way.

To demonstrate how Turgot did not do anything that nature would not have already done on its own, it is necessary to speculate on what would have happened had Turgot decided to refrain from his actions because of the bad crop yields in the summer of 1774. To begin with subsidies, consider what their economic effect would have been. There would have been more money chasing the same amount of bread, leading to the same price increases (falsely labeled as “inflation”) that Soll blames the liberalization for. Or at least that is what would have happened if not for price controls on the bread. Because of that, what would happen is that there would be major shortages of bread and black markets would have formed because selling at the government-mandated price would not have been profitable. So, the same lack of bread that Soll blames on wicked speculators would have ensued should the government have remained in control. On to government-owned storehouses of grain, it is doubtless that they would not have found a way to increase their own reserves without going into debt and importing grain from other countries, so it is likely that the same unrest from hunger other distributors of bread in France encountered would have befallen their overseers had Turgot not abolished them. As for bread distribution to the poor, had Turgot not abolished it, there would have been a serious scarcity of bread because of the bad harvest. As Soll himself mentions, it seems that even Turgot had reversed course on this matter, as he was trying to have grain imported from Poland by the French government. So, the common theme here is that nothing the government could have done would have controlled what the farmland produced. Soll’s trying to blame the Flour War on Turgot’s policies thus come across as being more political ideology than it is history or economics.

In case the reader is still not convinced and feels that state interventionism could have prevented the excesses of the Flour War, it is worth looking at what occurred once the French state was put back in charge of the grain market after some rough terrain under Turgot made them skeptical of the Physiocrats’ model. Nothing better demonstrates how the French government was indeed not omnipotent than the fact that in 1788, there was a terrible harvest and the unrest from it led in 1789 to a little event you might have heard of, known as the French Revolution. Even the Flour War did not outright lead to the toppling of the Ancien Régime. A bit beside the point, but if one wants to point to an example of economic mismanagement, the leaders of the French Revolution best encapsulated it. Causing money to be made worthless via the printing press and nearly causing starvation via price controls on food. Turgot was sorely needed, as at least he knew that importing food could help with famine. If nothing else, all this shows that the free market in food alone is not needed to cause unrest. A physical scarcity of food is the prerequisite.