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chapter six: On Things Which Push Governments in This Mistaken Direction - Benjamin Constant, Principles of Politics Applicable to All Governments [1815]

Edition used:

Principles of Politics Applicable to a all Governments, trans. Dennis O’Keeffe, ed. Etienne Hofmann, Introduction by Nicholas Capaldi (Indianapolis: Liberty Fund, 2003).

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chapter six

On Things Which Push Governments in This Mistaken Direction

It is all the more important that these truths make some breakthrough in the outlooks of government, in that each category of proprietors, makers, and manufacturers endlessly begs the intervention of government against everything which diminishes its immediate profit, whether by useful discoveries or some kind of new production; and it has to be feared that the governors may take the interests of these groups to be those of society. These two sets of interest are, for all that, almost always mutually opposed.46

The demands addressed to government by those in trade, to prevent competition, the installation of equipment, improvement in communications, and proliferation of commodities, could be translated thus: allow us alone to buy or sell such and such an object, so that we can sell it to you dearer. [302] Is it not odd that such demands have been welcomed so often?

When profits fall, business people are inclined to complain of the decline of trade. The diminution in profits is, however, the natural effect of progressive prosperity. Business profits fall: 1. Because of competition. 2. Because earnings rise, as a result of competition which increases labor prices. 3. By the increased flow of capital into commerce, which lowers the rate of interest. Now, these three causes of the diminution in profits are three signs of prosperity. This, however, is when business people complain and appeal about it to government, for special intervention,47 such that in the event, business people call for the intervention of government against commercial prosperity.

When the commercial mind mingles with the administrative one and dominates it, a thousand errors and ills ensue. Nothing is more dangerous than the habit and means used by individual interest to attain its purposes [303] transported into the administration of public affairs. Doubtless, the general interest is only the joining of all private ones. It is the joining of all these interests, however, by the cutting off of that part of each one which hurts the others. Now, it is precisely this part to which each private interest attaches the most value, because this is what in each circumstance is the most profitable to it. It follows from this that the private interest, which is very enlightened when it reasons on what matters to it and on what it must do, is a very bad guide when people want to generalize its reasonings and make them the basis of an administrative system. We see an individual enriching himself through a monopoly, and without reflecting on the fact that this is at the nation’s expense, we establish monopolies precisely as a means of wealth for the nation in question, when the reality is that they impoverish and despoil it. This is because governments are ordinarily steered toward these stances by men imbued with mercantile prejudices; and by a singular contradiction, but one they do not notice, by basing their prohibitive measures on the blindness or harmful tendency of special interests, they constantly institutionalize the calculations of special interest, as rules of their public conduct.

What we say about the business outlook does not apply solely to the group which is called “business” to distinguish it from other groups. This outlook becomes common to all people in society who harvest, produce, or accumulate in order to sell. Thus farmers contract the business outlook when it comes to selling grain, and we see them drawn into the same errors as men involved in purely mercantile speculation. Did not the owners of vineyards in France ask the King’s Council in about 1731 to forbid the plantation of new vineyards?48 Did not landowners in counties near London petition the House of Commons, for no large roads to be opened to the more distant [304] areas, for fear that the wheat from these areas, arriving more easily in the capital, might lower the price of theirs?49 If rentiers dared, they would speak about falling interest rates the way business people do of falling profits. A rentier, having for long lent his money at ten percent and now finding he can place it only at five percent, would ask nothing better than to say that the country he lived in was going to ruin because he was finding himself less well off there. He would most readily solicit the government for measures to stop interest rates falling. It is nevertheless incontestable that a fall in interest rates proves the prosperity of a country and a rise proves its bad financial situation.

In industry, prohibitions are the type of arbitrary measure which some men can use against others; and just as in civil disagreements they seek to seize arbitrary power instead of destroying it, in the cause of trade they seek to seize control of arbitrary regulations. They almost never protest against prohibitions in general, but strive to have them put to their advantage. Following the introduction of silk manufacture, under Henry IV, the cloth manufacturers demanded these manufactures be banned.50 Following the introduction of cotton stuffs, the silk manufacturers called for a prohibitive law against them. Following the invention of prints, cotton manufacturers represented them as a frightful calamity.51 If all this pleading had been listened to, France would have neither silks, nor cottons, nor prints. Each manufacture, like each newborn religion, claims freedom. Each manufacture, like each established religion, preaches persecution.

What is most fatal in regulations is that motivated by necessity which does not exist, they sometimes create it. Men arrange their calculations and their habits according to regulations, which then become as dangerous to revoke as they are troublesome to maintain.52

M. de Montesquieu, as a judicious writer observes,53 had only very superficial ideas about political [305] economy. We must avoid taking him for a guide in this matter. Everything he explained as regards institutions he believed he justified; the discovery of the motive made him indulgent of the institution, because it made him pleased with himself. Speaking of the system of prohibitions in England, he said, “they obstruct the trader, but this is in favor of the trade”;54 he would have been more correct to say: they obstruct the trade in favor of some traders.55

[46. ]See Constant’s Note FF at the end of Book XII.

[47. ]See Constant’s Note GG at the end of Book XII.

[48. ]Constant found the example of this decree of 1731 in Adam Smith, op. cit., t. I, p. 332.

[49. ]See Constant’s Note HH at the end of Book XII.

[50. ]See Constant’s Note II at the end of Book XII.

[51. ]See Constant’s Note JJ at the end of Book XII.

[52. ]See Constant’s Note KK at the end of Book XII.

[53. ]See Constant’s Note LL at the end of Book XII.

[54. ]See Constant’s Note MM at the end of Book XII.

[55. ]See Constant’s Note NN at the end of Book XII.

[FF. [Refers to page 249.]]See Smith, Livre I, Ch. 11.100

[[329] GG. [Refers to page 249.]]Smith, Livre I.101

[HH. [Refers to page 250.]]Some details of the obstacles placed in the way of work in England by the laws on domicile in the parishes.102

[II. [Refers to page 250.]]Sully’s Mémoires.103

[JJ. [Refers to page 250.]]Say, Livre I, Ch. 30.104

[KK. [Refers to page 251.]]Smith, Livre IV, Ch. 7.105 Say, I, Ch. 36.106

[LL. [Refers to page 251.]]Garnier, Notes on Smith.107

[MM. [Refers to page 251.]]Esprit des lois, XX, 12.

[[330] NN. [Refers to page 251.]]When one allows oneself to censure one of M. Montesquieu’s opinions, one is in duty bound to give good reasons. The one I will cite will show that this great man, so superior writing on political questions, sometimes did not apply himself to commercial questions. “Whaling,” he says, Esprit des lois, XX, 6, “almost never recoups its costs; but those who have been employed in building the vessel, those who have supplied the gear, the tackle, the provisions, are also those who take the greatest interest in this whaling. If they lose on the whaling, they have earned on the supplying.”108 But if they are at once in the business of fishing [sic] and supplying, from whom do they earn on the supplying what they lose on the fishing? To listen to M. de Montesquieu, one would think that they indemnified themselves against their own losses. A strange kind of profit!

[FF. [Refers to page 249.]]See Smith, Livre I, Ch. 11.100

[[329] GG. [Refers to page 249.]]Smith, Livre I.101

[HH. [Refers to page 250.]]Some details of the obstacles placed in the way of work in England by the laws on domicile in the parishes.102

[II. [Refers to page 250.]]Sully’s Mémoires.103

[JJ. [Refers to page 250.]]Say, Livre I, Ch. 30.104

[KK. [Refers to page 251.]]Smith, Livre IV, Ch. 7.105 Say, I, Ch. 36.106

[LL. [Refers to page 251.]]Garnier, Notes on Smith.107

[[330] NN. [Refers to page 251.]]When one allows oneself to censure one of M. Montesquieu’s opinions, one is in duty bound to give good reasons. The one I will cite will show that this great man, so superior writing on political questions, sometimes did not apply himself to commercial questions. “Whaling,” he says, Esprit des lois, XX, 6, “almost never recoups its costs; but those who have been employed in building the vessel, those who have supplied the gear, the tackle, the provisions, are also those who take the greatest interest in this whaling. If they lose on the whaling, they have earned on the supplying.”108 But if they are at once in the business of fishing [sic] and supplying, from whom do they earn on the supplying what they lose on the fishing? To listen to M. de Montesquieu, one would think that they indemnified themselves against their own losses. A strange kind of profit!

[100]Adam Smith, op. cit., Livre I, Ch. 11, t. II, pp. 164–165: “However, the particular interest of those who follow a particular branch of commerce or manufacturing is always in some respects different and even contrary to that of the public.”

[101]Ibid., t. I, pp. 179–201, in Ch. 9 Des profits des capitaux.

[102]These details are brought together at the beginning of A Few Additional Points, p. 529.

[103]This reference to Sully’s Mémoires comes from Charles Ganilh, op. cit., t. I, pp. 315–316, n. 1, the text being as follows: “Sully, who did not see the benefits of manufacturing and trade, opposed the edict favoring navigation, and constantly found fault with Henry IV’s provisions for establishing the manufacture of Flemish-style tapestries in France and Dutch-style linens, as well as for setting up colonies in Canada, and trading establishments in the Indies.” See on this point Mémoires de Maximilien de Béthune, duc de Sully, Liège, F.-J. Desoer, 1788, t. V, pp. 63–72 (Livre XVI, 1603).

[104]Jean-Baptiste Say, op. cit., t. I, p. 247.

[105]Rather than Ch. 7 it is Ch. 5, Digression sur le commerce des blés et sur les lois y relatives, to which Constant seems to be referring; Adam Smith, op. cit., t. II, pp. 206–249. The precise idea that the regulations create an imaginary necessity is not, however, explicit in this chapter.

[106]Jean-Baptiste Say, op. cit., t. I, pp. 293–311; Ch. 36 is called Du commerce des grains and, just as in Smith, it does not feature the idea put forward by Constant.

[107]Germain Garnier, Notes du traducteur, in: Adam Smith, op. cit., t. V, pp. 202–204, Note XXI Des erreurs de Montesquieu en économie politique.

[108]This critique of Montesquieu comes directly from Say, op. cit., Livre I, Ch. 23.