France's free market reforms in 1774–6 and Russia's in 1991–3: the immediate relevance of L'Abbé de Condillac's analysis

Abstract

In both Russia today and France when Turgot became Controller of Finances the freeing of food markets produced sharp price increases and extensive unpopularity. Taking advantage of liberalization requires an extensive trading infrastructure which eighteenth-century France and twentieth-century Russia lacked. L'Abbé du Condillac published Le Commerce et Le Gouvernment just before Turgot's fall in 1776 and he included the obstacles to the practical implementation of the reform programme in a powerful theoretical exposition of utility based economic theory, much admired by Jevons, where the incentive to grow food depends on the utility of the goods it can be exchanged for which include manufactures. The merchants who organize the marketing of food also strengthen agricultural incentives. If corn cannot be sold for its true price (vrai prix) less will be grown, so free markets which produce higher prices are a precondition for the realization of an economy's productive potential.