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Foutu maximum: The political economy of price controls and national defense in revolutionary France

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  • Rouanet, Louis

Abstract

War necessitates both allocating real resources to defense and certain interest groups being in favor of the government raising resources to wage war. Price controls can be a tool for governments to mobilize additional resources while buying the support of certain key interest groups, hence making war politically viable. France during the revolutionary Terror, the first instance of widespread price controls used in times of war, is used to illustrate this hypothesis. Urban capitalists benefited from price controls on agricultural output combined with forced sales. At the same time, I estimate that in the six months preceding the abolition of price controls, the government saved, by using them (and in real terms), the equivalent of roughly 40% of the annual 1790 central government budget. Consistent with my theory, once the exigencies of the war attenuated and as collective action became more costly for the urban population, price controls were abandoned.

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  • Rouanet, Louis, 2023. "Foutu maximum: The political economy of price controls and national defense in revolutionary France," Explorations in Economic History, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:exehis:v:88:y:2023:i:c:s0014498322000560
    DOI: 10.1016/j.eeh.2022.101478
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    1. Cutsinger, Bryan P. & Rouanet, Louis & Ingber, Joshua S., 2023. "Assignats or death: The politics and dynamics of hyperinflation in revolutionary France," European Economic Review, Elsevier, vol. 157(C).

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    More about this item

    Keywords

    Price controls; War; Public choice; Economic history;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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