Nota bene: Below is another short excerpt from Chapter 3 of my forthcoming book with Salim Rashid, Das Adam Smith Problematic? Ethics, Economics and Society. (The works cited are included below the fold.)
“[Das Quesnay-Problem] refers to an internal contradiction in Physiocracy—an influential school of political economy led by the French polymath François Quesnay—the tension between laissez-faire and despotism in pre-revolutionary France…. On the one hand, the Physiocrats were champions of free markets and economic freedom, or in the eloquent words of Walter Bagehot, this new school of laissez-faire economists ‘delighted in proving that the whole structure of the French laws upon industry was wrong; that prohibitions ought not to be imposed on the import of foreign manufactures; that [subsidies] ought not to be given to native ones; that the exportation of corn ought to be free; that the whole country ought to be a fiscal unit; that there should be no duty between any province; and so on in other cases.’ (Bagehot 1876, p. 32) But at the same time, the Économistes, starting with Quesnay himself, had ‘an eager zeal for … despotism,’ for they wanted to accomplish their radical free market reforms ‘by the fiat of the sovereign.’ (ibid., p. 35) How does Adam Smith resolve this tension between ‘natural liberty’ and free markets on the one hand and the reality of centralized power and hereditary monarchy on the other? In short, what is the relationship between democracy and capitalism? (see generally Friedman 2002) Is democracy a necessary or sufficient condition for Smith’s system of natural liberty? Or to borrow an actual historical example …, if Smith had to choose just one of the following three places to live in the 20th century—Juan Perón’s Argentina, Fidel Castro’s Cuba, or Augusto Pinochet’s Chile—which of these despotic Latin American regimes would he have chosen? A hard choice indeed!”
Works cited
Bagehot, W. (1876). Adam Smith as a person. Fortnightly Review (New Series), 20: 18–42. Reprinted in The Works and Life of Walter Bagehot (R. Barrington, ed.), Vol. 7. Longmans, Green. Available online https://perma.cc/6D8G-N2BS
Friedman, M. (2002) [1962]. Capitalism and Freedom, 40th anniversary edition. University of Chicago Press.
prior probability 