Review (1891) of Gustave de Molinari’s
Fundamental Notions of Political Economy (1891)

by E. Castelot (1844-?)

Notions Fondamentales d’Économie Politique et Programme Économique. Par G. DE MOLINARI. Paris: Guillaumin et Cie. 1891.

GM-FNP.1 In an interesting and able contribution to one of the last numbers of the Political Science Quarterly, a distinguished French economist, M. Charles Gide, gives as one of the reasons why the contemporary French economic school is undervalued outside France that ‘French economists are ill prepared to accept the scientific method of the day, that of evolution.’ Now, this remark, though bitter, may be true, but it surely does not apply to M. de Molinari, who although a defender of laissez-faire – his first Études Économiques having been published almost a century ago – has thoroughly accepted the theory of evolution and the preponderating influence of dynamical agencies in social and economical development. In the book under review he constantly and consistently takes this view of the subject.
GM-FNP.2 Taking the law of economy of force, and the law of the results of free comptition as the basis of the early development of civilization, M. de Molinari shows how, at a later stage, in proportion as mankind has settled down to industry and commerce and offered the products of its labour for exchange, the inequality of the pressure of competition has called into action a third law, the law of the progression of value, of which he has given an elegant formula: – Whenever the relations between the quantities of two commodities or two services offered in exchange varies according to an arithmetical progression, the relation between the values of these two commodities or services varies according to a geometrical progression.
GM-FNP.3 M. de Molinari proceeds to demonstrate that these three natural laws lead to the progress of production, and to the useful distribution of riches, since they determine a incessant gravitation of prices toward the minimum cost of production. It is thus – by an economical gravitation – that the state of equilibrium is reached between consumption, production, and the retribution of the productive agencies.
GM-FNP.4 The chapter entitled ‘Le Capital immobilier – La production de l’homme,’ contains a brilliant refutation of Mr. Henry George’s well-known statement about the illegitimacy of private ownership of land. M. de Molinari starts with the reflexion that, in regard to the claims of mankind, there is no distinction to be drawn between appropriation by individuals and appropriation by a nation. In the name of what right, for instance, are Laplanders and Greenlanders excluded from sharing in the Government of Washington? Both have an equal right to what nature, according to Mr. Henry George, supplies with such impartiality. There is, in fact, no difference between the value of a house and that of the land on which it is built: both have their origin in the labour and savings of man. In Europe, after so many centuries of occupation, we cannot trace the origin of the property of land, but we are able to do so in America, and if the expenses of the conquest, of the occupation, and of the administration of land are taken into account, we shall find that its actual value is rather below than above its cost. No such thing as ‘the unearned increment’ exists; owing only to the fact that land is everlasting, and that it is not movable, these physical conditions generate in some cases an increment of value, and in other cases a decrement, both quite natural, and due in no way to artificial causes. In Europe, landowners are suffering just now under the influence of the latter, and the same thing will occur in the United States, when their land will have to compete against the still almost virgin soil of South America, Australia, and Africa.
GM-FNP.5 In the second part, entitled ‘Progress and its Impediments’ (Progrès et Obstacles), the author proceeds to explain how at all times, since the origin of mankind, these natural laws have promoted human progress, how the impediments due sometimes to the influence of man and to external circumstances have gradually been removed by the progress first of destructive industry (war and the material of war securing the preponderance of civilized over uncivilized races), and later on by that of productive industry, and principally of the means of communication, which have extended the field of competition and favoured the mobilization of produce, capital, and labour. The actual state of struggle between capital and labour is caused, according to M. de Molinari, by the want of mobility of labour, and the want of an independent and connecting link between the employer, or entrepreneur, and the workmen, which should act in the same way as the corn-dealer between the man who grows corn and the man who buys bread. In the opinion of M. de Molinari, Trade Unions cannot fill up the existing gap, although they have been useful, and have enabled labour to obtain a firmer standing ground, but they are inefficient whenever a local over-supply of hands exists. Trade Unions cannot usefully combine the parts of producers and of providers of labour; they want the requisite capacity; the credit, and means of accurate information which are indispensable to direct a proper supply of labour towards the market where it is in demand. This view has been defended long ago by M. de Molinari, who, to bring it into practical application, started the idea of the Paris Bourse du Travail, unhappily now a focus of petty political agitation. Yet he does not despair, for he is convinced that ‘every time that an operation corresponds to a want and is able to yield a profit, the agency of natural law develops the creation of a suitable organ.’ When this intermediate agent is developed, when publicity is enlisted in the service of labour, as it is in the service of capital, the price of labour will be determined in an impersonal way according to the general fluctuations of supply and demand, just as the prices of the loan of capital and of the staple articles of consumption are determined, and the actual state of hostility will come to an end. Eleven years ago, in a contribution to the Revue du Mouvement Social, M. de Molinari sketched out the plan on which such agencies might be organized. He recommends the foundation of free and independent joint-stock companies, whose branch establishments covering the whole area of the civilized world, would, on payment of a small percentage on the amount of his wages, assist the workman in all the circumstances of his life (military service, railway journeys, payment of taxes, saving-banks, &c.), and even grant him, with due caution, occasional advances on the future remuneration of his work. But, true to his leading principle, M. de Molinari would not allow the State to take this service in its hands.
GM-FNP.6 But, for all this, M. de Molinari is far from believing that there can be any such thing as a panacea for all social and economical disorders: he expressly maintains that, when we shall have realized the regimen which is adapted to the present state of society, new deficiencies will be discovered and call for new remedial developments.
GM-FNP.7 In the third part, the Programme Économique, M. de Molinari sums up the amount of progress which has been reached in the arts of production and of destruction or defence, and points to the other reforms which ought now to be carried, such as the abolition of customs duties, house taxes, the insurance against the risk of war by the constitution of a League of Neutrals, and the simplification of the State reduced to its proper functions of preserver of public and private security. This programme is entirely founded on the unrestrained agency of natural laws, and consequently is in thorough opposition to the Socialistic programmes which start from the denial of the existence of such laws.
GM-FNP.8 I have sought to give, in these few words, a sketch of the main outlines of a work singularly well connected and full of accurate reasoning, which, though opposed to some of the prevailing tendencies of the day, invites careful study and research, and deserves to be recommended to all who are interested in the greatest problem of our time.

Economic Journal 1, no. 3 (September 1891), pp. 601-603.

[See also J. B. Clark’s review]

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