The Turgot Prize, created in 1987 by the Association of Alumni of the Institut de Haute Finance (IHFI), is awarded each year at the Ministry of Economy and Finance, to the best French-language books on economics and finance. The title of the Prize refers to Anne-Jacques-Robert Turgot, Comptroller General of Finance under Louis XVI, who is considered one of the theorists of economic liberalism. It was therefore logical for the alumni of the IHFI to dedicate to the man behind the Prize, a column (in 4 parts) devoted to the education, the “system”, the legacy of Turgot and the eponymous Prize. This tribute – which owes much to the biographies of Turgot written by Condorcet (1787), Say (1887) and Gignoux (1945) – attempts to show that Turgot’s thought has never been so alive and useful.

1 / EDUCATION

Anne-Jacques-Robert Turgot (1727-1781), the third son of Michel-Étienne Turgot, president of the Marchands de Paris, completed brilliant studies at the Lycée Louis le Grand, then at the Saint-Sulpice seminary and at the Sorbonne, as Abbé de Laulne. There he wrote a notable letter on “paper which replaces money” in which he criticized the Laws system, and he defended his theology license in the form of two theses, one of which was devoted to the “Table of the progress of the human spirit”. 

In 1751, the ex-abbot became deputy to the Attorney General of the Parliament of Paris, then Master of Requests.  He then frequented the literary salons, including that of Julie de Lespinasse, where he rubbed shoulders with the greatest philosophers of his time, including d’Alembert and the encyclopedists. In his two speeches on Universal History written in 1751, Turgot, who was open to technical progress, noted that “the mechanical arts have never suffered the same eclipse as the arts and the speculative sciences.  Once an art is invented, it becomes a self-sustaining object of commerce”.  In 1755 he wrote several articles for the Encyclopedia on Etymology, Existence, Expansibility, Foundations, and Fairs and Markets, which were particularly noticed by Voltaire.

But Turgot’s main claim to fame was his entry into the “sect of economists”, with Quesnay and de Gournay. The first was the founder of the Physiocrats, who opposed the Mercantilism defended by Colbert. The “sect” maintained that “agriculture was the only producer of wealth, and should be governed by a natural order” without state intervention. In his pamphlet on Natural Law, Quesnay stated that “labor is everything” and that “money, an instrument of exchange, does not produce itself”. But Turgot was especially influenced by the second, Vincent de Gournay, intendant of commerce and author of the famous axiom “laisser faire, laisser passer” (literally, “let it be done, let it pass”), which Dupont de Nemours praised in writing. It was while traveling the provinces with Gournay that Turgot observed the abuses of taxation and bureaucracy, and that he developed his famous “method”. In 1759, he wrote a eulogy for his teacher, in which he put into perspective the scope of “the natural order of agriculture” and observed the growing importance of industry and trade. He summed up Gournay’s thinking in three propositions: “to restore to all branches of commerce that precious freedom which prejudices, the facility of the government to lend itself to particular interests and the desire for a misunderstood perfection have caused it to lose; to facilitate the work of all members of the State in order to achieve the greatest competition in sales…; to give the buyer the greatest possible number of competitors by opening to sellers all the outlets for their goods… ”   

Turgot’s early writings reveal the future “Turgot the administrator, Turgot the economist, Turgot the philosopher, but also Turgot the poet”.  During the 1750s, he developed a theory of the formation and evolution of discourse which was part of a reflection shared with Maupertuis, Dumarsais, Condillac and, above all, Rousseau. He also reflected on the impossibility of expressing value in itself in his draft article on “Values ​​and Currencies”: “all that human language can state is that the value of one thing is equal to the value of another; there is no fundamental unit given by nature; there is only an arbitrary and conventional unit”. In his Éloge de Gournay, he claims that “the market value of each commodity, all costs deducted, is the only rule for judging the benefit that the State derives from a certain kind of production” and that, “consequently, any manufacture whose market value does not compensate for the costs it requires is of no benefit, and the sums employed to support it despite the natural course of trade are a tax imposed on the nation as a pure loss”.

In February 1770, under the pseudonym l’Abbé de l’Aage, Turgot submitted to Voltaire his translation of Virgil’s Eighth Eclogue and Book Four of the Aeneid. He also proposed an ambitious reform of French poetry, based on “number, cadence” and “a new system of harmony” … In his article on etymology in the Encyclopedia, Turgot also argued that the latter “should be conceived as the science which gives access to the truth (ετυμος) of discourse (λογος); he divides the discipline into two aspects, that of invention, responsible for multiplying conjectures about the origin of words as freely as possible, and that of criticism, responsible for filtering these conjectures in order to retain only the most appropriate”. According to Turgot, invention must be a space of “unlimited freedom”.

But Turgot’s main learning experience came from his time as intendant of the Généralité de Limoges (1761-1772), which allowed him to discover the disastrous state of France and to test the validity of the “system” which made him famous and in 1774 earned him the position of Comptroller General of the Kingdom’s finances. 

2 / THE “SYSTEM”

Turgot’s “system” to restore the economy of France, in the words of Condorcet, was summarized by the three famous recommendations lavished on King Louis XVI in his famous letter of August 1774: “No bankruptcy. No tax increases. No borrowing. No bankruptcy, neither admitted nor masked by forced reductions “. But the “method” advocated by Turgot was based mainly on the establishment of “freedom of labor” (in fact, the freedom to undertake) and “trade” (in practice, free competition and freedom of prices). Turgot was the inspiration for the Le Chapelier law, which repealed corporations in France. On the then hotly debated issue of colonization, Turgot showed great lucidity. In a Memorandum of April 1776, he considered the independence of the United States inevitable: “Nothing can stop the course of events, which will certainly sooner or later bring about the absolute independence of the English colonies and, as an inevitable consequence, a total revolution in Europe’s relations with America.” On the issue of slavery, reasoning as an economist, Turgot predicted that slavery would disappear because slaves were overexploited by their masters, which reduced their life expectancy at work and increased the cost of their use; as the system of slavery proved unprofitable, he advocated the settlement of free men in the colonies, granting them land. 

For the common sense of his “system”, his appointment was well received: Voltaire called him “the guardian angel” and “regretted being ready to die now that he sees virtue and reason in power”. It was proclaimed in Paris that Louis XVI, “the new Béarnais, had found a new Sully”.

But Turgot quickly faced the Queen’s hostility, the princes’ claims, the intrigues of the Court and the criticisms of the other ministers. He had to overcome the famine following the terrible winter of 1776, which led to the “flour war”. The rise in the price of bread was caused by poor harvests, but also by the flour stockpiling carried out by speculators after the release of grain prices decreed by the Comptroller General of Finances. He also clashed with the reactions of the three bodies of the State – the nobles, the clergy and the third estate – when he wanted to institute his Six edicts aiming at “the suppression of corvées, the grain police in Paris, the offices on the quays, the halls and the quays in Paris, the guilds and the masters, the Poissy fund and the duties on tanners”. Turgot was then accused of rushing reforms and wanting to undermine royal authority. He lost the King’s confidence and was asked to leave his ministry, which lasted only twenty months. In his last letter to the King, he dared to write: “Never forget, Sire, that it was weakness that put the head of James I on the block.” Voltaire then wrote to him: “You have ruled for twenty months, which will be an eternal time”. Necker, the Swiss banker who succeeded him, led a policy of expedients opposed to the reform policy advocated by Turgot.

Until his death at the age of 54 in 1781, Turgot continued to publish memoirs on various subjects and to correspond with the greatest philosophers of his time. According to Condorcet, Turgot’s last reading was about Necker’s Report (called “Blue Tale”), distributed to more than one hundred thousand copies, which detailed “the pensions and the rejoicings of Versailles”.

3 / HIS LEGACY

Most economists of the eighteenth and nineteenth centuries recognized that Turgot is, along with Adam Smith, one of the founders of economic liberalism. “Turgot is one of those thinkers whose works are as durable as the human race,” reads the Dictionary of Political Economy published in 1850 by Coquelin and Guillaumin, while Leon Say declared in 1890: “Turgot prepared the conquest of the universe by Western civilization”. But his successors were inspired too little and too late by Turgot’s precepts to avoid the excesses of the Revolution of 1789. Renan wrote in his Intellectual and Moral Reformation: “If Turgot had lived long enough to see the Revolution, he would have been almost the only one with the right to remain calm, for he had clearly indicated what had to be done to prevent it “.

According to Léon Say, Turgot was “like the invisible director of the economic conscience of the Constituents of 1791”.  His main ideas on tax matters were taken up within the Constituent Assembly by his disciple Dupont de Nemours, a supporter of “the real tax relating only to visible wealth and recovered with guarantees against arbitrariness”. The doctrines on labor conceived by Turgot – and presented in particular in his edict of 1776 – directly inspired the Chapelier law which abolished corporations, and the law of March 17, 1791: “from April 1, it will be free for every citizen to exercise any profession or any trade he sees fit, after having obtained a license and complying with the regulations that may be made “.

Turgot also inspired Malthus and Ricardo by stating “that one can never suppose that double advances give a double product”, thus introducing the law of diminishing returns. Turgot also influenced them by observing that there is “between the wealth produced, income and wages, a natural proportion which is established by itself and which means that neither the entrepreneur nor the owner has an interest in wages falling below these proportions” … “the poorly paid man works less well, the salaried man, if he earns less, consumes less “, thus prefiguring the law of natural outlets of Jean-Baptiste Say (it is true denounced by Keynes).

But the most famous and most controversial legacy remains that of Adam Smith, a contemporary of Turgot and author of The Wealth of Nations, published in 1776, seven years after the publication of Turgot’s Reflections on the Formation and Distribution of Wealth. Jean-Baptiste Say argued that “Turgot was Smith’s master” and Rogers claimed that “Smith was influenced by Quesnay, Turgot and Mirabeau.” Smith and Turgot exchanged letters that have not been found and Turgot expressed his interest in Smith’s works, paradoxically, more for his Theory of Moral Sentiments than for The Wealth of Nations. It seems that his thinking differs from Smith’s, mainly because the latter adapted the French physiocratic doctrine to the needs of the pre-industrial revolution and to English utilitarian philosophy. Smith thus proved closer to the homo economicus than Turgot. 

The Turgot Club, which pre-selects the eponymous Prize, has endeavored to highlight the innovative ideas put forward by Turgot 250 years ago in the economic works published over the last 37 years.

4 / TURGOT, INSPIRATION FOR THE EPONYMOUS AWARD

The Turgot Prize pays tribute each year to the ten best books written by French-speaking economists and financiers: the Grand Prize, the Jury Prize, three honorable mentions, the Young Author Prize, the Collective Works Prize, the Best Teaching Manual Prize, the Francophonie Prize and the Turgot-DFCG Prize. These awards recognize the authors who have most contributed to the promotion of economic culture in the French-speaking world. These prizes are preselected by the Turgot Club, which brings together 20 alumni of the Institut de Haute Finance, then selected by a large jury composed of 15 personalities, chaired by Jean-Claude Trichet, former president of the Banque de France and the European Central Bank.

In his preface to the book “French Economic Thought. The new challenges ” published in 2023 by Vuibert editions, Jean-Claude Trichet reveals how the Turgot Club and the Grand Jury select the award-winning books:

“However, this reasoned review of economics books published since 2016 does not only bring together the reflections of economists, experienced actors and informed observers on the reactions of governments and managers of the State and companies to contemporary crises. It also helps to revive the thought of Anne Robert Jacques Turgot and to show its ever-present character. Like Turgot, the authors cited in this book engage in in-depth diagnoses and often propose ambitious programs to reform or rebuild major economic systems. Like Turgot, the authors cited in this book strive to remove certain contradictions, notably on the role of the State and on the limits of public spending. Did Turgot not write that in times of crisis, it was sometimes necessary to ‘forget doctrine’ and ‘provide relief to the most destitute and accelerate public works’? Like Turgot’s main memoirs, this review compares the reflections exchanged in the different fields of economic thought.

Did not Condorcet believe that “all of Turgot’s opinions form a system that is equally vast and cohesive in all its parts”? The authors of this book have endeavored to alternate reviews of theoretical treatises with those of practical books. Did John Stuart Mill not argue that “Turgot is the most remarkable example of a man who combines a philosophical spirit with the pursuit of an active life”? The works reviewed show how the principle of utility, which is the basis of neoclassical economics, is currently migrating towards the common good and the protection of nature. Condorcet forcefully recalls that, according to Turgot, “everything must tend not to the most just utility of society, a vague principle and a deep source of bad laws, but to the maintenance of the enjoyment of natural rights”. This is his profound originality in relation to John Stuart Mill, who was his contemporary, and to English utilitarianism. Still, the economy must allow for this enjoyment of natural rights. In the present period, which is so demanding for public finances and in which our country must make difficult decisions, I cannot fail to quote Turgot once again: “We ask what to cut, and each authorizing officer will argue that almost all particular expenses are indispensable. They may have very good reasons; but since there are none for doing the impossible, all these reasons must yield to the absolute necessity of the economy. “

 

Extract from the preface by J-C Trichet

In Jl. Chambon and J-J.Pluchart, La pensée économique française. Les nouveaux enjeux”, Eds Vuibert, 2023, 223 pages.