chapter  2
25 Pages

The political economy of the early modern state

At the very beginning of the 17th century a new concept with a great future was born: political economy. More precisely it was first used by the French poet, adventurer and maker of steel Antoine de Montchrétien. His Traicté de l’oeconomie politique (1615) was to a large extent an attack on everything foreign. Outlandish merchants he recalled as ‘bloodsuckers’ and for la belle France he had only praise to deliver. It is the fairest, most happy and freest of all nations in the world, he claimed. In order to make a country prosper he especially emphasizes the role of manufactures and the establishment of more handicrafts. However, in order to facilitate such a growth strategy, a system of industrial protection must be created, he argued. It was a patriotic duty to avoid buying anything from abroad. But to the extent that people forgot this duty the state had to intervene in the form of high tariffs or even more draconian measures in order to avoid importation. In arguing for protection Montchrétien was by no means alone. An even

earlier and more influential French proponent was Barthélemy de Laffemas, the valet of Henry IV who in a series of texts at the turn of the sixteenth century had argued for a programme of state intervention in order to establish centralized manufactures and other forms of industry with the help of tariffs as well as other protective measures.1 Both Laffemas and Montchrétien were in agreement that a prosperous economy was a precondition for a powerful state that could compete successfully (in military terms as well) with the rest of the world. However, they also believed that a powerful state was a precondition for a growing economy. Thus power and plenty were closely interlinked phenomena and two sides of the same coin (against this background they would have been bewildered by the debates on mercantilism from the 1930s onwards, which not least were focused on what came first, power or plenty).2 They argued that no wars could be fought without money in the king’s coffers. In order to increase the flow of money into the princely Camera, more taxes on land and other objects must be introduced. This in turn necessitated the employment of better trained and more effective taxmen and administrators. At the same time they were certainly aware that too much tax and other burdens put on the shoulders of peasants and tradesmen could be harmful in a longer time perspective, for the king’s income. In order not

to drain out all water in the pond so that the fish was killed, economic growth was necessary in a long-term perspective and from the perspective of the prince and his military power (perhaps Mancur Olson would have called him a ‘stationary bandit who could only survive if his taxpayers did the same’).3