The Past Speaks

AS:

In 2002, George W. Bush was reported to have told Tony Blair that the French “have no word for ‘entrepreneur.’ ” He appears to have made this statement, which he later denied, in the course of arguing that French culture is somehow less supportive of entrepreneurship than the cultures of the English-speaking nations.^[1]

The comment attributed to Bush was appalling on three levels. First, “entrepreneur” is a French word. Second, there is lots of entrepreneurship in France and other French-speaking societies. Third, French thinkers have played a crucial role in developing the modern concept of the entrepreneur.

I’m posting a review of a new biography of Jean-Baptiste Say (1767-1832), the French economists. Actually, this book is the first ever biography of Say in any language, which is itself surprising. The other interesting thing about this biography is that it looks at Say’s business career and relates it to his economic ideas.  Say was himself an entrepreneur. Moreover, he wrote about entrepreneurs.

It is a commonplace in the history of economic thought to say that pre-Schumpeter economists said little about entrepreneurs and instead preferred to deal with highly abstract concepts, such as comparative advantage. There are, however, some important exceptions to this generalization, most of whom came from the French-speaking world.  It appears that writers on economic topics in the French speaking world were much more aware of the importance of the individual entrepreneur.

One of these writers was, of course, Richard Cantillon (1680s-1734), the Irish-born Parisian banker. Cantillon’s interest in entrepreneurship reflected his own background in business, which included a stint promoting the Compagnie de l’Occident, a North American colonial venture commonly known as the Mississippi Company.^[2] In his 1730 Essai sur la Nature du Commerce en Général, Cantillon defined an entrepreneur as an investor who ventured capital in a relatively risky enterprise in the hopes of earning high profits.

Cantillon paved the way for the discussion of entrepreneurship by Jean-Baptiste Say who discussed the crucial role of the entrepreneur in creating value by shifting resources into faster-growing parts of the economy.^[3] The word entrepreneur entered the English language very slowly: when the Say’s works were translated into English in 1836, the translator decided to render “entrepreneur” as “adventurer”, a term reminiscent of the investors who had “adventured” or lent money to the Hudson’s Bay Company. As the translator noted in a footnote, “the term entrepreneur is difficult to render in English ; the corresponding  word, undertaker, being already appropriated to a limited sense. It signifies the master-manufacturer in manufacture, the farmer in agriculture, and the merchant in commerce ; and generally in all three branches, the person who takes  upon himself the immediate responsibility, risk, and conduct of a concern of  industry, whether upon his own or a borrowed capital. For want of a better word, it will be rendered into English by the term adventurer” ^[4][5]

The history of economic thought is one of my side-bar academic interests, so I will certainly have to read this new biography of Say.

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Evert Schoorl, Jean-Baptiste Say: Revolutionary, Entrepreneur, Economist. London: Routledge. 2013. xix + 210 pp. £85 (hardcover), ISBN: 978-415-66517-9.

Reviewed for EH.Net by Steven Kates, School of Economics, Finance and Marketing, RMIT University (Melbourne, Australia).

A Truly Upright, Brave and Enlightened Man

This is the kind of book that ought to make the history of economic thought an essential part in the education of any economist. It adds depth to what you think you know already, adds in much you may not have known before, and makes you think about economic theory in a different way, deepening your understanding of how economies work.

Evert Schoorl’s Jean-Baptiste Say: Revolutionary, Entrepreneur, Economist is surprisingly the first biography of Say ever written. It thus discusses the life of one of the most influential economists who has ever lived and whose work still has much to offer to both economists and historians of thought. Even when you thought you knew who he was, the context of his writings and what he stood for, unless you really had done the work, large slices of what really matters are unlikely ever to have become known to you.

Start with this. If you know anything about Say then you know he was an entrepreneur. The conclusion I had always drawn from this was that he was in the mold of David Ricardo, someone whose work in the business world carved out a life of prosperity in which he could indulge his economic pursuits. Instead, Say ran a succession of businesses in which the continual problems that every entrepreneur must expect to face were the problems he faced himself. Each of the businesses he engaged in were difficult and none succeeded into the long term.

Indeed, until well past middle age, and continuing almost until the last years of his life, he was in a continual struggle to maintain an adequate personal income, and while he was still running his businesses it was a constant struggle to keep his businesses afloat. And rather than the secure foundation a rich industrialist might have been expected to have, his was a life of great personal financial insecurity where every franc he earned counted. As Schoorl points out, “at the age of fifty, Say still did not have a regular and safe income” (p. 91). It is an incredible part of the story finding just how difficult Say’s personal finances were for most of his life.

Thus, the story of his standing up to Napoleon at the height of his powers makes Say’s own personal integrity a matter of actual astonishment. Who else are you aware of who has a personal history that includes anything like the following kind of event, let alone by someone who faced relentless financial insecurity almost to the end of his days? “When the Traité had been published in 1803, Bonaparte invited its author to his domicile at Mailmaison in September and asked him to rewrite certain free-market parts in a more interventionist vein. … Upon his refusal to comply, Say lost his membership of the Tribunat. Nevertheless he was offered a tax collectorship …  far away from Paris [getting him out of Paris probably being the reason for the offer]. … But Say equally refused the tax directorship” (p. 36).

Say himself later in life described this moment. And in reading this passage, it is well to remember that according to Schoorl Say’s annual income in 1795 was around 5000 francs (p. 180). “During my period as Tribun, not wanting to deliver orations in favour of the usurper, and not having the permission to speak against him, I drafted and published my Traité d’Economie Politique. Bonaparte commanded me to attend him and offered me 40 thousand francs a year to write in favour of his opinion; I refused, and was caught up in the purge of 1804” (p. 36).

This is near superhuman. But it’s just this kind of integrity and resolve that made him stick to his guns during the many controversies he involved himself in throughout his life. And it is also the kind of detail that makes this such a compelling biography. There really was a life about which a story was there to be told and most certainly it is that story Schoorl has now indeed told and told very well.

But this is an intellectual biography as well, which inevitably includes a discussion of Say’s Law. Therefore, I am compelled to note that Schoorl has brought me into the story but should you be concerned that my positive review is in return for his own positive discussion of my own work, let me first note this: where Schoorl has written “he has given the best explanation of the law of markets” the “he” referred to is Murray Rothbard. Well I might dispute this, but not here; all is forgiven since what we find is the most judicious short discussion of two centuries of debate over the law of markets to be found anywhere, with myself found at the extreme end of the pro-Say spectrum, which I fear is actually the case.

Re “Say’s” Law I will say only this. There is firstly the principle that demand is constituted by supply, that goods buy goods. That is from Say and the physiocrats. And then there is the question whether an economy can suffer from demand deficiency. That is the issue that has remained controversial to this day but has its origins in James Mill who in explaining in 1808 why too little demand was never the cause of recessions brought forward as part of his argument a passage he had found in Say. That Say accepted this point is clearly shown in his Letters to Mr. Malthus published in 1820 during the general glut debate after Malthus’s Principleswere published that same year, but that was not Say’s own original contribution

These were not, however, the only controversies Say found himself in the midst of, with his discussion with Ricardo and others over the theory of value possibly the most important in terms of the history of economic theory. But other issues were important in their own time with the question surrounding whether slavery was a profitable basis for an economy of immediate practical interest. Whether Say thought it was or it wasn’t – on this he changed his mind later in life – he was always disgusted by the practice.

Evert Schoorl has told an exceptionally important story in an exceptionally interesting way. The person who emerges is the same person described by John Stuart Mill who had met Say in 1820: “a truly upright, brave and enlightened man” (p 109). And so he was – as this book so comprehensively shows.

Steven Kates teaches economics at RMIT University in Melbourne, Australia. His own most recent book is Defending the History of Economic Thought (Edward Elgar 2013), which is, so far as he knows, the first book ever written on this subject.steve.kates@rmit.edu.au