(Post by Bruce Wilder, Elevated from the Comments)
The French Revolution is in many ways, it is the prime historical example of state failure related to fiscal failure (the inability to tax the rich in particular) leading to revolution (and post-revolution, to the unleashing of state capacity in Napoleonic empire building)
Ancien Régime France at the end of the 18th century had an underdeveloped financial sector, was overpopulated relative to its agricultural productivity, had lost a big chunk of its colonial empire and despite the theoretical advantages of its 17th century legacy of centralizing absolutism, was a litigious society of particularism, privilege, and resentment.
The crisis when it came found many fissures in the fiscal firmament of the state. The privileged often enjoyed exemptions from certain taxes, sometimes purchased with office by some ancestor. The collection of certain taxes was in private hands. At the time of the revolution, an extensive wall around Paris was being built by a consortium of private “tax farmers” expecting to grow rich on their role in colltecting such taxes. So, it wasn’t just that the rich and powerful avoided paying taxes, key figures were also skimming from the tax revenue collected.
The expedients of a fiat money and a central bank had been tainted fatally by John Law and the Mississippi Bubble. The Paris financial sector was entirely in the hands of Swiss and Dutch bankers and speculators. One of these, Necker, followed in the tradition of Colbert, and was quite popular in part because he created a system of State pawn shops, which relieved some of the inconvenience.
The political parallels and contrasts with the UK were stark. The UK had had its own South Sea Bubble at the same time as the Mississippi Bubble, but in the UK, the South Seas Company was folded into the Bank of England and the national debt was serviced ever after at a “risk-free” rate, a floor for other rates. The French Treasury paid rates to the Dutch and Swiss bankers that reflected the increasing risk of default. State finances in France were obscure. Necker would publish the first accounts in what historians now regard as a propaganda exercise. Once the French state was borrowing to meet its obligations to repay earlier loans, it almost didn’t matter how tax revenues were trending, because the debt began to compound and the servicing cost was escalating.
The UK had used its fiscal capacity and central bank to outspend France in a series of wars beginning at the end of the 17th century. There had been a pause, but the rivalry had resumed, culminating in the Seven Years’ War, with Britain subsidizing its continental ally, Prussia.
The inability of the UK to tax their 13 American colonies to finance the war debt caused the American Revolution before the French Revolution. And the example taught the French.
The UK had experienced an agricultural revolution of sorts in the late 17th and early 18th century as Adam Smith’s “improving landlords” began very fine calculations on the advantages of Jethro Tull’s inventions, turnips and forage in crop rotation and the profit from further enclosing the commons, a process underway since the Tudors. The gains in land and labor productivity were small but significant and fed a growing urban population. The population of England nearly doubled in the course of the 18th century.
France was not so fortunate. French agriculture was notoriously backward and resisted the promotional efforts of royal reformers and intendants. Feudal dues were collected in large areas by the church or impoverished nobles with no power to manage or improve the properties.
The nascent “business cycle” of 18th century France was an agrarian cycle of boom and famine: a good harvest could feed an expansion of mercantile and artisanal sectors. A famine would drive France into a business depression. The Physiocrats observed the pattern and made a theory out of it. And, from the Physiocrats came the liberalism of Turgot.
The same Dutch and Swiss bankers took liberalism and fashioned an argument for a laissez faire response to famine: let the price of grain be what the market will bear. Very appealing argument to grain speculators financed by Dutch and Swiss bankers.
Failing to control the price of bread or the distribution of grain stores had a profound effect on the course of the Revolution, motivating the common people of Paris to march and riot and so forth even as their betters debated the Rights of Man.
KT Chong
Actually, what’s going on right now in the USA is very similar to the final days leading up to the collapse of the USSR.
Here’s a segment of a TV show in China…
https://www.youtube.com/watch?v=TYOIBSTfyPc
Here’s the full video in Chinese at the official channel: https://www.youtube.com/watch?v=WZF6LAzV_-8
Jan Wiklund
And, by the way, the English revolution also followed when the state was bankrupt and tried to tax without the consent of parliament.
And the Swedish “revolution” in 1680, which however never went outside the law, had the same cause – the state couldn’t pay its own officials because 2/3 of the land had been granted away to non-paying nobles. See https://en.wikipedia.org/wiki/Great_Reduction
The idea that revolutions follow state bankrupcies is very simple. Revolutions aren’t made just by the populace, but also by angry state officers who don’t get out their salaries.
elkern
Thx, Bruce Wilder (and to Ian for bumping this up).
History is an infinite rabbit hole! I’d never heard of John Law or the Mississippi Bubble; I fancy that I know more of our history than most Americans do, but French “Louisiana” was just blank space (and “Indians”) on my map.
More embarrassing, I thought “Jethro Tull” was a just rock band; I had always thought that they invented the name, to sound quaint and vaguely ominous. Wiki’s entry on “Jethro Tull (agriculturalist)” was news to me. Kinda sounds like he invented his “seed drill” because he was having trouble with his peasants…
Even more interesting to me was the idea that Tull’s “New Horse-Hoeing Husbandry” was a kind of revolution against /Virgilian/ agricultural practices – that is, farming based on a poem written in 29 BCE!
As a kid, I hated reading, until I discovered Sci-Fi. Around age 30, I discovered that History is even crazier than Sci-Fi…
Mark Level
A great and informative piece by bruce, and the connection to modern rentier carve-outs of taxes for the connected is clear as daylight. Trump plans to void all taxes on the billionaires like himself, displace them with consumption taxes on the hoi polloi & serf classes which every competent economist (see Michael Hudson, Richard Wolf and Yves Smith among others) notes will not at all work over any period of time.
This is beyond the discredited Laffer Curve nonsense, true “Voodoo Zombie” economics, to give a little credit to the late Poppy Bush Senior. The Chinese along with numerous others are quickly disinvesting from economic coordination with USA.
Ironically (but predictably) the “working-class” MAGA folks will get effed over most quickly as we all know the effete, PMC Shit Libs have more resources and will probably weather the chaos and economic crash slightly better. At some point I would predict Trump will refuse to honor Treasury Bills and other instruments held by the Chinese, since only external “enemies” get “punished”, the true Enemy Within, the Billionaire class, is well cosseted.
Listening to a depressing Grayzone episode where in other news, they mention Trump dragging some total losers into his admin: “Dr. Oz” who has recently declared that poor people not only don’t deserve health care, they don’t deserve “health”!! For how long can the policy of both parties, “Let them eat cake” succeed?
Only Dog knows, I cannot foresee any future for the US beyond massive collapse, economic and military.
bruce wilder
I have a hard time penetrating exactly what went wrong in the final collapse of the Soviet Union. One hypothesis I have is ideological exhaustion as the primary driver with long-delayed generational change in leadership coupled with long-delayed reform as the catalyst for collapse.
If I go with that story, the parallels with the U.S. and its Empire are fairly easy to draw: certainly the exhaustion of both neocon geopolitical ideology and neoliberal economic ideology are devoutly to be wished for. I am not altogether sure neoliberalism is quite old enough, but the neocon rationales certainly are. It is telling in an important way against the neocons that the suspicion that the CIA was behind the JFK assassination has become conventional wisdom even as the idea that that is when “it all went wrong” solidifies.
The French Revolution was shaped in part by disappointed expectations among idealists in the rationalizing potential of French absolutism. The Stuarts in Britain had pushed for absolutism. Certainly that was the ideological claim of James I and Charles I, though they didn’t have the material & financial resources of their Tudor predecessors to assemble an administrative establishment or political coalition. When, with Cromwell, the economy began to expand and more realistic expectations for the size and scope of government set in, Charles II and especially James II attempted more of a centralizing absolutism, but an oligarchy of landed gentry and landed aristocracy rather famously put paid to those schemes. But, in solving problems of governance, the oligarchy proved to be quite successful proponents of rational innovation. They invented constitutional monarchy, the “loyal opposition”, the central bank, the sinking fund, the Navigation Acts, the “United Kingdom”, the “Bill of Rights”, at least a limited religious toleration, and so on.
France, by contrast, saw Louis XIV succeed in putting in place a government of centralizing absolutism, complete with a standing army of 100,000. The later philosophes of the French Enlightenment were much taken with the potential for an absolute monarch to impose his Will and in doing so to rationalize the tangled mess of vestigial feudal institutions. But, mostly it didn’t happen. France was saddled with irrationalities layered on top of one another. Religious toleration was abolished. Court precedence required pedigrees. Venality of Office limited the monarch’s ability to choose the Officers of State. Efforts were made, of course, but mostly served to illustrate the impotence of the state instead of its power. The French monarch attempted to govern the provinces thru absurdly understaffed and underfunded Intendants, who were forever promoting failing modernizing and development schemes. Alexis de Tocqueville would look back on the feeble schemes of the Intendants and argue that the rationalizing potential was alive in embryo in the French monarchy and the Revolution was therefore “unnecessary” to achieving modernity; thus, he invented a whole strain of conservative thinking, able to reject a need for a left while embracing modernity.
The ideologies of French absolutism were exhausted by the time of the accession of Louis XVI who wanted to be popular. Upon his accession, he dismissed René Nicolas de Maupeou, the last Chancellor of France, who had been pressing a thorough reform of the judicial parlements, the bastions of reactionary obstruction to the reform of tax farming among other issues. Maupeou, interestingly, owned his Great Office of State and could not be replaced only removed from power.
French public opinion was coming into its own in the second half of the 18th century and perhaps more judgmental than wise in the formation of a mercurial consensus of middle-class conventional wisdom. Cynicism about the competence and motivations of courtiers may have been well-motivated, but not necessarily evidence-based. The infamous Affair of the Necklace dimmed the reputation the Royals toward a flickering of legitimacy. Did the Queen actually say, “Let the eat cake.”? We can never know, but the important point is that no one ever did know. It didn’t matter what the truth might have been; the legend prevailed in common belief.
I think this loss of presumed legitimacy may be an important parallel to our American Imperial collapse. I don’t know if American popular opinion is more fractured or more at odds with elite opinion. Maybe the 18th century French really did live in simpler times or more likely I do not appreciate many details, but there is no doubt that French popular opinion did crystallize with seeming suddenness at a series of milestones, such as “The Great Fear”. Americans seem unlikely to act with such singularity, but I can imagine some very likely events triggering a latent suspicion’s transformation into a broadly held contempt. This is already happening, imho. I am anticipating, as many already do, a stock market collapse, a dollar exchange rate decline or a military disaster like the loss of a carrier.
Early on in the French Revolution, many of the leading French actors were led by expectations shaped by the widespread admiration for British institutions and the American revolutionary example of rational and deliberate constitutional writing. Mirabeau aspired to create a constitutional monarchy and looked likely to succeed. In the event, the French were not good at deliberative politics in those early days and failed to agree on even “obvious” models for consensus institution building, opting instead for alternating between pragmatic venality and radical cruelty.
The French, after a long period of chaos, found their Napoleon, who doesn’t get enough credit for creating institutional resolutions to the major issues raised by the Revolution: a concordant with the Catholic Church, a Bank of France, and most importantly, a thoroughly rationalized legal code. One objective “good” result of the French Revolution was equality before the law and significantly fewer lawyers.
The Russians, after their thankfully quieter period of chaos, found their Putin, who has created institutional solutions to managing the Russian political economy. That has often meant transmuting a local mafia into a local political establishment, but it seems to mostly “work” even if it tolerates a degree of corruption. And, it is explicitly legalistic in its mechanics, creating a society that seems fairly safe and stable for ordinary people.
Will the U.S. find its way to institutional reform under “a strong man” after a prolonged period of instability? That seems plausible.
Mark Pontin
Bruce W: ‘At the time of the revolution, an extensive wall around Paris was being built by a consortium of private “tax farmers” expecting to grow rich on their role in collecting such taxes.’
@ Bruce —
Fascinating. Please, if you’re able to direct me to ources that provide more information on this datum, I’d much appreciate it.
This would be very much in line with current archeological and anthropological discoveries suggesting, for instance, that the first Mesopotamian walled city-states in the third millenium BC and China’s Great Wall in the seventh century BC were constructed to keep those states’ subject populations inside their walls, producing grain and wealth for their elite classes, at least as much as to keep enemies out.
It’s also resembles 21st century neoliberal governments continually importing immigrant workers to “create larger GDPs” against the wishes of their own native populations.
In other words, elite mentalities really haven’t advanced much 3500 BC: the greater the number of slaves, serfs, and low-cost workers, the greater the surpluses created for elites to extract.
Mark Pontin
Sources. Not ources, dammit!
bruce wilder
Wall of the Ferme générale
https://en.wikipedia.org/wiki/Wall_of_the_Ferme_g%C3%A9n%C3%A9rale
The Wall and the tax survived the Revolution but at least it became a source of municipal revenue and eventually Baron Haussmann paved the damn thing.
Jorge
Also, the French Rev was probably kicked off by the birth of Laki, an Icelandic volcano, in 1783. Agricultural disruptions occurred all over Europe. France had a very screwed-up governmental structure that made it the most vulnerable of all European states.
https://en.wikipedia.org/wiki/Laki
Mark Pontin
@ Bruce —
Grazie!
Occasional Commentator
In all of the revolutions mentioned in the comments – English, French, Russian, fall of the USSR etc – there was a replacement system waiting in the wings ready to take over when the old order fell apart. Nothing like this exists in present-day USA. Lots of disgruntled and angry people, some with guns, but no organized revolutionaries planning for the downfall of the current order, no Chicago Boys from the rival superpower. Lots of LARPing on Twitter and elsewhere by people who front like they are grizzled warriors and ready to fight to the death but it’s not like, say, Russia in 1917 with thousands of battle hardened men and their weapons back from the front, extremely pissed off and ready to take down the king.
There won’t be a revolution or civil war in America anytime soon. More likely is a further descent into dystopian irrationalism and, as climate change wreaks havoc and economic conditions worsen, a massive upsurge in crackpot religious groups and cultists of all kinds. Young people barely read anymore and many Americans are borderline illiterate. Inundated by a flood of AI slop and a thousand kinds of internet nuttery they will be unable to make rational sense of what is happening and will retreat into kooky mysticism and irrationality.
When violence breaks out it will be Luigi style vigilantism, looting, settling of personal scores and gangs of thugs and “revolutionaries” shooting at each other in the streets. Think of Rittenhouse, Antifa, Proud Boys, the Floyd riots and the CHAZ in Seattle but on a larger scale. The military will crush these people and implement martial law. Pockets of anarchy and “autonomous zones” controlled by rival factions will remain.
If the system breaks down enough to drive fallen middle-class normies into the streets there will be chaos, there will be violence but there won’t be a revolution. The system won’t fall completely because there is nothing to take its place.
Fe4ral Finster
@bruce wilder:
“I have a hard time penetrating exactly what went wrong in the final collapse of the Soviet Union. One hypothesis I have is ideological exhaustion as the primary driver with long-delayed generational change in leadership coupled with long-delayed reform as the catalyst for collapse.”
What happened was the accession of L.I. Brezhnev and his “Stability In Cadres” speech. Basically the subtext was “Comrades, as long as you are loyal to the new leadership, your prior support of N.S. Khruschev will not be held against you.”
The speech and the underlying policy were probably necessary at the time, as the last thing the USSR needed in 1965 was a purge and the chaos, finger-pointing and counter-accusations that go along with a purge. However, this also meant that, now that purges were not forthcoming and ideological reliability was no longer a requirement for CPSU membership, but simply a career move, one of those organizations that you had to join in order to get ahead, naturally, the CPSU started to attract more cynics and careerists.
Besides the inevitable stagnation (why bust my ass for a system that I don’t believe in and only participate in, to the extent it delivers me personal benefits?), the rising generation of cynics saw reform as an opportunity to grab a much bigger share of the goodies for themselves.
It is not an accident that the first iterations of Soviet and post-Soviet capitalists were Communist nomenklatura.
KT Chong
Trump has put himself and the country in a bad situation, but he doesn’t realize it yet.
Around April 10th, China to USA trade shut down.
It takes ~30 days for containers to travel from China to LA.
45 days to Houston by sea, 45 days to Chicago by train.
55 days to New York by sea.
That means the country will not feel the full economic impacts of what Trump did no April 10th until about May 10th.
Around that time, (and it’s already started to happen,) trucking work is going to dry up. Warehouses will start doing layoffs because no labor is needed to unload containers. Products will start to be out of stock, reducing the need for shipping labor.
All this will start in the Los Angeles area.
After about 2 weeks, it will start hitting Chicago and Houston.
Let’s say Trump and his teams of economic illiterates, started to notice after 3 weeks, changes their mind on May 31st.
“This isn’t working out like we thought it would. Let’s dial tariffs back to 0.”
And, let’s assume China says, “bygones be bygones, we’ll go back to how things were,” … and it’s not a certainty that China will forgive and forget; it is actually more likely that China won’t. If I can figure this out, all the big brains at China leadership must know that they will be able to drag this one out to exert maximum pressures and force concessions from Trump when he realizes his shits have hit the fan.
But, let’s just assume that China decides to play nice. Let’s assume every factory in China that got screwed by their orders being cancelled, they all says the same thing “no problem, we’ll make and ship!” We’re also assuming that all of them are still in business, and there won’t be any lead time to restarting productions.
The problem is, even under the most favorable conditions of China and the factories restarting economic ties as though nothing happened, it will be at least another 30 days before economic activity is revived.
And that’s just in LA.
In Chicago/Houston, you’ll need to wait another 45 days.
New York, at that point, will still be getting containers from before April 10th, they will then have 50 days (May 31 minus April 10) of zero economic activity at the ports, in trucking of Chinese goods, in warehousing.
The whole situation is a bit like lockdowns. Once you shut down, it takes a long time to get economic activity back to where it was, if you ever can.
And again, this assumes, that China and its factories, which make things you can’t buy elsewhere, will start right back up again as though nothing happened, which is unlikely.
It’s almost like we’re speeding towards a brick wall but the driver of the car doesn’t see it yet.
By the time he does, it’ll be too late to hit the brakes
shagggz
@KT Chong,
That is a good post, but it is not yours. I don’t know if it runs afoul of any site rules, but giving the impression that it is your post feels like a violation.
Here’s the original: https://x.com/Molson_Hart/status/1915248938753392642