Economics

Echoes of the Estates-General: A Comparison between Ancient Regime France and 21st Century America (Part I)

The background to the French Revolution chronicles the decline of the once-powerful State, beset by a multitude of economic and social problems. Chief among these issues were: a bourgeoning national debt brought on by the cost of war, the increasing antagonisms between an unproductive class of nepotistic oligarchs and an impoverished mass of peasants and small artisans, and the increasing irrelevance of the country in comparison to other, more economically dynamic states. The United States in the 21st Century bears striking similarities to the pre-revolutionary France, as discontent with stagnating wages and widening inequality reaches a fever pitch as the 2020 election draws nearer. This is the first of two articles examining the economic and political similarities between them, at a volatile time in the history of both nations. State Debt and Poor Finances Between 1720 and 1780, France’s overseas trade had quadrupled, yet commercial prosperity was not enough to offset the abysmal condition of state finances. The combined cost of fighting the Seven Years’ War and the American War of Independence was 3.1 billion livres, over 4 times the Crown’s annual revenue. This was exacerbated by the fact that spending on war, the navy and diplomacy constituted 25% of Crown expenditure, in addition to the 50% that serviced the existing debt. Coupled with high interest rates that deterred moneylenders and an inefficient tax system that failed to raise revenue and allowed the nobility to remove officials who attempted to raise either direct or indirect taxes on them, there was a serious economic crisis by 1789. Since 9/11, the United States has poured $3.2 trillion into wars, reaching a total of $4.8 trillion once obligations to veterans have been paid. Engagements in Iraq, Afghanistan, Libya, Syria and other places have caused excessive deficit spending, and like in France in the 1780’s, an inefficient system of taxation that has involved lower taxes on the wealthy has only shifted the burden of debt onto the poor and future generations. George W Bush’s tax cuts in 2001 and 2003, and the tax breaks given to the billionaires by Trump are analogous to the exemptions that the French nobles received at the time of mass social breakdown at the end of the 1780’s. Against the backdrop of ballooning debt and the 2008 Financial Crisis, the concerns of the younger generations of Americans who have flocked to Bernie Sanders can be understood as a revolt against a system that allocates inordinate amounts of money towards wars and bank bailouts, but claims that education and healthcare are too costly. Inequality and Social Unrest The schisms and fissures that have opened up in American society as a result of widening inequality and resentment at excessive accumulation and monopolisation by unaccountable billionaires is reminiscent of the tax immunities and feudal privileges that exempted the French nobility from accountability along with the predominance of feudal privileges such as internal customs barriers and tolls that prevented the establishment of a home market for manufacturers, which Turgot’s reforms had failed to redress in 1774. The stultifying stagnation imposed on the French economy by the system of noble privileges made the conditions of the peasantry significantly worse, indicating that it was not only the burden of debt but mass social unrest that resulted from the Ancien Regime. Eric Hobsbawm, in his book the Age of Revolution stated that the nobility encroached considerably on the autonomy of the peasantry as feudal dues, tithes and taxes occupied an increasing share of peasants’ income. Ground between the millstones of noble exactions and price inflation, social breakdown and revolts among the peasantry were made practically inevitable by the late 1780’s. Peter Kropotkin, writing in The Great French Revolution, argued that the inequalities between the nobility and the peasantry, combined with the obstinacy of those in power, illustrated the sclerotic and outdated nature of what would later become the first and second estates of the Estates-General. He stated that “if despair and misery impelled the people to riot, it was the hope of obtaining some relief that incited them to revolt”. In 1777, 1,100,000 peasants were declared to be beggars. Between 1730 and 1789, wages rose by 22% but were unable to keep pace with prices, which rose by 60%, causing further immiseration for the French peasantry and precipitating risings of both the rural and the urban poor in 1788/1789. Inflation of the price of agrarian produce prevented the urban workers from gaining access to bread, and wage stagnation crippled a key market for manufactured goods. The three wealthiest billionaires in the United States: Jeff Bezos, Bill Gates and Warren Buffett, own as much wealth as the bottom half of the American population combined, indicating that capitalist accumulation has acted as an enormous fetter on the development of the productive forces, and that the majority of sectors of the economy have been sacrificed on the altar of short-term profit. Capital simply ‘goes on strike’ until it can find an adequate return on investment, as Big Pharma, for instance, has not produced a single new antibiotic in the nearly 4 decades since it was deregulated. Apple and Samsung, in lieu of investing in new technologies, have spent 7 years engaged in a costly ‘patent war’ over copying iPhones, have outsourced production to the Global South, or simply gambled on the stock exchange. The billionaire class in America has become a parasitic oligarchy that mirrors the nobility in Ancien Regime France, suffused with government subsidies and content with shoring up their positions on the market, as the nobility once clung to their feudal dues and court pensions. The unproductive nobility, who were not earners by birth, and who were barred from entering professions, influenced politics to increase their privileges, much as America’s unproductive billionaires buy off politicians today. Whether anything resembling the 1788/1789 agrarian riots will happen in America remains to be seen, although the levels of poverty in America have continued to climb recently. 49% of Americans now live paycheck to paycheck, and recent studies have linked 45,000 deaths per year to lack of health insurance. Loss of Global Hegemony The loss of power and influence on the world stage to other countries with expanding economies and greater political and technological capabilities is another major point of comparison between latter-day Ancien Regime France and 21st Century America. By the late 1780’s, Great Britain was already beginning to industrialise, buoyed by the prospect of free trade with the newly independent United States, the growing importance of slave-picked cotton from the American South, and the opening up of new markets in Latin America such as Brazil and Cuba whose economies of scale made them more profitable than mercantilist West Indian markets. The 1770’s and 1780’s saw the development of puddling furnaces, rolling mills and James Watt’s steam engine, alongside agricultural techniques that increased enclosures and developed profitable cash crops. France, by contrast, was still hampered by the inefficiency of feudal dues and tithes during Louis XVI’s administration, remaining “a nation of agriculture and handicrafts” according to Georges Lefebvre. Its commercial and colonial supremacy began to decline, and its traditional economic methods, internal trade restrictions and inadequate transport links acted as a bottleneck on economic progress, as Great Britain surged ahead. The collapse of American hegemony and the rise of China is one of the defining changes in modern geopolitics that radically reorients the global balance of power. Once again, the domestic unrest and discontent fermenting amongst a people can be contextualised within the decline of the country at large. There are countless examples in history of leaders using patriotism and perceived national importance to distract from economic failures by galvanising the spirit of the population. This becomes increasingly difficult at a time of national decline, as shown by Trump’s recent attempts to escalate tensions with Iran. Public opinion polls found that just 43% of the American public approved of the killing of General Soleimani, showing that the cynical use of patriotism to offset economic decline is becoming less tenable. Furthermore, the United States’ persistent refusal to allow the state to play a directing role in the allocation of resources has culminated in the United States ceding ground to the bureaucratic and ruthlessly efficient Chinese State, whose monopolistic tech companies exert a growing influence over countries ranging from Central Asia to Latin America. The United States remains a service economy, sustained by low wages, cheap credit and cheap imports which have led to a ballooning trade deficit of $616.8 billion (by late 2019). The Chinese, on the other hand, have understood the importance of digital infrastructure to the modern, interconnected global economy through the expansion of the Belt and Road Initiative and the Digital Silk Road. The background to the French Revolution shows that national decline, combined with economic stagnation and an unaccountable and bureaucratic class of elites who produce and contribute little of value can mobilise a mass of the labouring poor who recognise the injustice of the system they are living under. The concept of the ‘American Dream’ is becoming increasingly untenable as neoliberal capitalism proves itself incapable of innovation and only of injecting money into assets and speculation, while concentrating power and wealth in the hands of a few billionaires. From the demise of Bernie Sanders’ campaign to the desperate attempts of the ruling class to consolidate power in the wake of the Coronavirus by printing $1.5 trillion to stabilise markets while millions are still without health insurance, there is a significant chance that the current crisis of American neoliberalism may result in either social upheaval, or a revolutionary transformation of the economic system.

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