Commerce and Government Considered in Their Mutual Relationship
By Étienne Bonnot, Abbé de Condillac

Synopsis: This book, originally published in 1776 – mere months before Adam Smith’s Wealth of Nations – is the great economic treatise of the notable French philosopher Condillac. The book was unfortunately overshadowed by Smith’s work, even though Condillac’s work was superior in its ideas and correctness. A work promoting laissez faire, Condillac’s work is split into two parts: the first instructs the reader in the fundamental principles of economics, and the second describes the problems that arise with various forms of government intervention. Condillac’s work had a great influence on Carl Menger, founder of the Austrian School of Economics.

Strong Points: For its age, this book is surprisingly insightful, detailed, and analytical. Condillac’s brilliance is manifest throughout its pages; there is very little of what he writes that seem to be flawed ideas – a remarkable thing for the era. For its age, the book is rather engaging. It is a good translation from the original French. In fact, this is the only full translation of Condillac’s work into English, and it was accomplished very recently. This book is so impressive for its time that it would actually function as a decent intro to economics for the modern reader. The two sections of the book were well done; the groundwork for the fundamentals of economics in section one was laid clearly and expertly; the fallacies of government intervention in the second part of the book were very interesting and even relevant to the same problems of government intervention that we face today. It is the product of a brilliant mind. Those interested in the works of the classical economists and the Austrian School will be interested in the work of Condillac; he is quoted many times in Carl Menger’s Principles of Economics. Interestingly, the book even contains an analysis of the decadence of luxury that is reminiscent of the Nephite pride cycle familiar to those who have read the Book of Mormon.

Weak Points: While I appreciate very much that the editors of the project included introductory chapters into the life and work of Condillac – a great and welcome idea – the biography chapter on Condillac missed the mark severely. It was written for way too specialized of an audience, as though only PhDs in the history of philosophy would actually read Condillac. This particulareditorial introductory chapter was poorly written and excruciating for the layman. Another issue with the book is that it was written well before modern economic terminology was coined, and so the reader will find familiar concepts described, but not with the familiar terms. Also, there are some points where Condillac seems to miss the mark on, for example, showing too much concern for the negative aspects of the accumulation of luxury goods.

Interesting: 3/5

Must Read: 2.9/5

Overall: 3.7/5

Pages: 347

Selected Quotes: “A good does not have a value because it has a price, as people suppose, but it has a price because it has a value.” (p. 101).

“All this ownership is sacred. One could not without injustice deprive the manufacturer of his business or the worker of his wage. Therefore one should not be able to force the settler to sell his grain below its worth, just as one should not be able force those who need the grain to pay more than it is worth. These truths are so simple that perhaps one does not notice them and you may be astonished that I have commented on them. You will, however, need to remember them.” (p. 139).

“In becoming coin, metals have not ceased to be merchandise; they have an extra imprint and a new denomination; but they are still what they were, and they would not have a value as coinage if they did not continue to have value as merchandise. This observation is not as pointless as it may seem, because people would say, in the common reasoning on money, that it is not merchandise, and yet they do not have much to say about what it is.” (p. 147).

“Freedom alone can give each good its true price and cause commerce to flourish. It is then that order establishes itself naturally, that products of every kind multiply as does consumption; that all the land is brought to value; that every citizen finds his sustenance in his work, and plenty spreads. It spreads, I say, because habits are simple: but wretchedness spreads with luxury.” (p. 236).

“But why is the selfsame trade at the same time lucrative and ruinous? It is lucrative when individuals carry it on, because it is then run economically. It is enough for merchants to be in touch with the merchants of the countries where they trade. At the most, they will have factors wherever they need to have depots; and they avoid all useless expenditure because they see to everything by themselves.
“It is not the same for companies [i.e. government-controlled enterprises]. In the capital they need administrators, directors, clerks, employees: they need other administrators, other directors, other clerks, other employees wherever they form establishments. They also need, in addition to the counters and the warehouses, buildings as a monument to the vanity of the directors they employ. Forced to such outlays, how much will they not lose in embezzlement, in negligence, in incompetence? They pay for all the errors of those they employ to serve them; and all the more arise, as the administrators who succeed each other at the whim of faction, and who each see differently, never allow a sensible, sustained plan to be made. They form badly contrived enterprises: they carry them out as though randomly; and in an administration that seems to tie itself up in knots, they employ self-interested men to complicate it further. The direction of these companies is thus necessarily vicious.” (p. 314).


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