The Economics of Destutt de Tracy
Antoine Louis Claude Destutt de Tracy (1754–1836), a French philosopher and economist, is worthy of attention as a contributor to French liberal thought in the tradition of Condillac. Tracy’s deductive methodology, his liberal approach to governmental affairs, and his subjectivism qualify him as a proto-Austrian economist who enjoyed considerable influence not only in France but also around the world. This essay will briefly examine Tracy’s thought, concentrating on his theory of money and banking and his ideas on government. We will conclude with a review of the effect Tracy had on American Jeffersonian thought.
Ideology and Ideologists, Method, and Subjectivism
Destutt de Tracy’s economics were an outgrowth of his philosophy of “ideology.” Ideology, a term coined by Tracy about 1796, was to be a “science of the formation of ideas,”1 a comprehensive study of human action that began with a Lockean antisubstantialism and sensationalism. Tracy envisioned ideology as a superscience that would tie political, economic, and social issues together through the universal application of its insights into human behavior, “the greatest of arts, for the success of which all the others must cooperate, that of regulating society in such a way that man finds there the most help and the least possible annoyance from his own kind.”2
In this, ideology sought to replace theology as the dominant unifying system, and, further, to exclude all religious studies whatsoever from the ideological system. Tracy’s magnum opus was his Elémens d’ idéologie (1801–1815), a four-volume treatment of methodology and philosophy, which consisted of Idéologie proprement dite (1801), Grammaire (1803), Logique (1805), and Traité de la volonté et de ses effets (1815). His Traité de la volonté, or treatise on the will, was enthusiastically accepted by Thomas Jefferson and became the only volume of Tracy’s Elémens to be translated into English, under the title A Treatise on Political Economy.
Tracy’s colleagues called themselves “ideologists,” though the derisive title of “ideologues,” given them by Napoleon, stuck. These ideologues included Cabanis, Garat, Wenceslas Jaquemont, Jean-Baptiste Say, François Thurot, and others. Among Tracy’s friends were also Dupont de Nemours and the Marquis de Lafayette, through whom he communicated with Thomas Jefferson.
The inception of ideology was at a time of political upheaval in France. Tracy’s attempts at riding the fence between royalist and Republican were largely unsuccessful. Tracy barely escaped execution during the Reign of Terror, having been imprisoned for nearly a year (November 1793–October 1794). The emergence of the Napoleonic empire did not provide the ideologues with lasting security. Though Napoleon courted the ideologues for some time, he began in 1802 to show open hostility to this group whose liberalism stood in opposition to his dictatorial policies. However, the success of ideology was not strictly limited by this domestic opposition, as Tracy’s ideas found enthusiastic sponsors in the rest of Europe and the Western Hemisphere.
Destutt de Tracy and the ideologues were heavily influenced by Abbé de Condillac. Condillac’s liberalism and deductive methodology were the foundation of much of Tracy’s work on economics.3 John Locke’s influence is present in the ideologues’ thought, notably in Tracy’s writings on property rights. Clearly, Tracy also followed Jean-Baptiste Say, especially in the subjective-value tradition, but Tracy perhaps anticipated him in his attack on calculation or algebraic expression in the social sciences. In this, Tracy can be effectively distinguished from the French positivists, who, unlike the ideologues, were attempting to employ tools from the physical sciences in the field of social science.
It would be a misunderstanding of ideology to say that its purpose was to unify the physical and social sciences. The ideologues recognized that social sciences were fundamentally different from physical sciences, but they applied deductive methods to both. Daniel Klein writes,
The mode of analysis is the same in all endeavors: to establish primary principles which come from the most simple ideas…which in turn come directly from our sensations. What distinguishes the different sciences is the object being investigated, and the ideologues definitely believed that the social sciences give way to a very differently structured body of thought than do the physical sciences.4
Upon the foundation of sensibility, many of Tracy’s predecessors had hoped to establish an exact mathematical science of human thought. Tracy, however, breaking with Condorcet’s social mathematics and Condillac’s langue des calculs, believed with Locke that much of reality could not be reduced to mathematical constructs. Emmet Kennedy writes,
Through observation and deduction, not calculus or geometry, one could discover the other propositions contained in the original truth, “man is a sensitive being,” and thereby reduce all the human sciences to a few basic truths. This science of observation and deduction, the “analysis of ideas,” all ideas, not just mathematical ideas, was “ideology” to which all the other sciences could be reduced. “Ideology” itself reducible to none, guaranteed the unity of the sciences.5
Destutt de Tracy was also part of the catallactic and subjective-value tradition, which proceeded from Turgot and Say. In his Traité de la volonté, he writes,
Society is purely and solely a continual series of exchanges. It is never anything else, in any epoch of its duration, from its commencement the most unformed, to its greatest perfection. And this is the greatest eulogy we can give to it, for exchange is an admirable transaction, in which the two contracting parties always both gain; consequently society is an uninterrupted succession of advantages, unceasingly renewed for all its members.6
Tracy further reinforces the idea of subjective value in exchange, saying that “[w]henever I make an exchange freely, and without constraint, it is because I desire the thing I receive more than that I give; and on the contrary, he with whom I bargain desires what I offer more than that which he renders me.”7 In the Traité, in the chapter “Of the Measure of Utility or of Values,” he writes that “the measure of the utility of a thing…is the vivacity with which it is generally desired.”8 Tracy follows that statement with an argument that the free-market price is the best way to find out what that value is. Tracy emphasizes the benefits to society of free exchange, acknowledging the Smithian concentration on the division of labor, but criticizing Smith for failing to investigate exchange as the driving force behind the division of labor.9
“Labour” was instead upheld as highly productive as compared to land. Furthermore, “labour” for Tracy was largely the work of the entrepreneur in saving and investing the fruits of previous labor. The entrepreneur, he pointed out, saves capital, employs other individuals, and produces a utility beyond the original value of his capital. Only the capitalist saves part of what he earns to reinvest it and produce new wealth. Dramatically, Tracy concluded, “Industrial entrepreneurs are really the heart of the body politic, and their capital is its blood.”10
Tracy had avid followers in Italy, Russia, Britain, and elsewhere in Europe. His shadow, as we shall see below, even extended across the Atlantic to South America and to the American Jeffersonians. However, despite the international influence which Destutt de Tracy wielded, and the impact which he had on the French liberal school, Tracy has been neglected in investigations into the history of economic methodology. Daniel Klein argues that Nassau Senior, John Stuart Mill, and others have “received much attention in this literature,” while “the forerunners Condillac and Tracy…have been almost entirely overlooked.”11 Joseph Salerno shows that the influence of Tracy and other French liberal writers has extended to “economists as diverse in analytical approach and ideological preference as Eugen von Böhm-Bawerk, Vilfredo Pareto, Francesco Ferrara, Gustav Cassel, and Othmar Spann….”12
In an effort to obtain a better grasp of the quality of Tracy’s writings, we shall briefly examine his work in the area of political economy. Tracy’s Traité de la volonté is of particular interest, and we shall look at Tracy’s insights in monetary and political theory using this work and others.
Destutt de Tracy on Money and Banking
Tracy begins his chapter on money in the Traité by referring the reader back to his exposition on value, and makes it clear that he is writing of “the conventional value, or market price,” all of which “are measured the one by the other.”13 Tracy then proceeds to present the problem of the double coincidence of wants, and to detail the characteristics of an ideal money:
We can give hay for corn, or corn for wood; a cart-load of potters clay, or of brick earth, for some plates or tiles, etc.; but it is evident that this is very inconvenient, that it occasions removals so troublesome as to render most affairs impracticable….14
This problem is resolved by money, Tracy tells us, but he specifically refers to precious metals. Destutt de Tracy was a hard-money advocate of the first order, believing that a silver standard was ideal, “because it is this which is best adapted to the greatest number of subdivisions, of which there is need in exchanges. Gold is too rare, the other metals too common.”15
After defending the use of a silver standard over other metallic standards, Tracy almost immediately launches into an attack on the governmental manipulation of the currency. Tracy claimed that the very naming of currencies (livres, sous, deniers, etc.) was used by the state to divorce the value of the currency in exchange from the value of the metal in the coin itself. His ruthless assault on inflation is worth quoting at length:
“[T]hese arbitrary denominations being once admitted and employed in all the obligations contracted, we sh