1. Tocqueville’s financial method

In a similar way to modern financial analysis, Tocqueville (Reference Tocqueville2004, p. 246) points out that “one must determine, first, the wealth of the nation and, second, the portion of that wealth devoted to state expenses.” The problem is that these data (measured today with respect to GDP) did not exist at that time. We also did not know “how much each citizen of the Union pays annually to underwrite society’s expenditures” (ibid., p. 249). Tocqueville then retains as indicators that he calls “signs”: the appearance of material prosperity, disposable income, the satisfaction of the citizens, and the presence of capital for industry and of industrial opportunities for capital. From these indicators, he deduces that “the American in the United States gives the state a much smaller part of his income than the Frenchman” (ibid., p. 250). But this result cannot be retained because France has, contrary to the United States, significant public expenditures linked to wars (debt, army):Footnote ⁹ “there is simply no parallel between the finances of countries in such different situations” (ibid., p. 250).

In order to elaborate a comparative framework, which is methodologically pertinent, Tocqueville isolates the constituent expenses of the democratic State, excluding military expenses, expenses related to customs (such as festivals, art, etc.), or cyclical expenses related to the recruitment of civil servants in a labor marker that favors private careers. He also distinguishes the items of expenditure (salaries, schools, maintenance, etc.) in order to understand the effects, which are contrary in an exceptional way, of the general tendencies of democratic budgets. Anticipating Weber’s notions of the ideal-type and of the scientific model of modern science, Tocqueville divided society ideally into three classes (ibid., p. 239): the wealthy, the well-to-do and the poor. He creates a special section for expenditure related to habits and customs (architectural ornaments, working class festivals), constituting what can be called the sociological factor of cultural values, because their effect is varied. For expenditure related to public agents, he draws a parallel (ibid., p. 244) between representative salaries in the United States and in France. He finally considers different factors that can be brought together, in order to systematize his analysis, in a model based on four causes according to their political, sociological, economic and cognitive nature.

2. The variables of democratic expenditure

Faithful to the liberal creed, the theory of TocquevilleFootnote ¹⁰ firstly shows the superiority of the democratic State over despotism which “ruins men more by preventing them from producing than by depriving them of the fruits of production” while “liberty, by contrast, begets far more wealth” (Tocqueville, Reference Tocqueville2004, p. 238). Public expenditures in free States are considerably higher but “the people’s resources always increase faster than taxes (ibid., p. 239).

Belonging to political causality (see Table I: cause 1), the first factor is institutional (see Table I: item 11). It deals with the logic of fiscal decision making (see Table I: item 111) by the class in power. If the rich class governs, it economizes public money in a limited way because “a tax imposed on a large fortune will subtract only from what is superfluous” (ibid., p. 239). The middle class in power is more economical because “nothing is as disastrous as a heavy tax on a small fortune” (ibid., p. 239). When the poor class governs (Table I: item 1111), taxes do not touch them because “only under a democratic government […] can those who vote to impose taxes escape the obligation to pay them” (ibid., p. 240). Public expenditures, financed by the taxation of richer people, would always be high. Universal suffrage however “hands the government of society to the poor”, ibid., p. 240), that is to say to the majority of people who could not live without working. The government of the democratic majority cannot ignore the demands of its poor people who are numerous; it should be noted that this idea is still espoused today (Brown and Hunter Reference Brown and Hunter1999, p. 780).

Table i The expenditure factors of the democratic State according to Tocqueville

An ideological factor (Table I: item 12) must be classified as a political cause. It concerns political and social progress (Table I: item 121), the improvement of the public expenditure of “well-being”. “The improving spirit” aims “to improve the lot of the poor man” (ibid., p. 241). Democratic government works for material prosperity firstly through a kind of electoralism (item 1211); it also wants, in a legitimate way according to TocquevilleFootnote ¹¹, to improve the lot of deprived people (item 1212: conception), which entails public expenditure: “in democracies, where the sovereign is needy, there is little likelihood of obtaining his benevolence without ameliorating his condition, which can seldom be done without money” (ibid., p. 242). It also generates public expenditure because of “a sort of permanent fever that turns to innovation of every kind” (ibid., p. 241).

The squandering of public money by a democratic administration (item 13) constitutes the third political factor: “because the views of democracy change frequently […] its undertakings are sometimes poorly managed or left unfinished” (ibid., p. 242). Administrative management (item 131) is defective (shortcomings: item 1311); it entails a waste of public money and thus pushes towards expenditure. Democratic governments “often lack perseverance in their designs” […] fail to maintain constant supervision of the men they employ […] often spend the taxpayer’s money to no purpose” (ibid., p. 251). The topicality of this analysis is in this case also real, when we think of policies currently applied in most OECD countries in order to ensure the efficiency of public expenditures (Leroy Reference Leroy2007). This willingness, periodically renewed in democratic history, to struggle against waste is well illustrated by budgets based on results and objectives. In France, budgetary performance is one of the foundations of the reform instituted by the organic law relative to public finance laws of 1 August, 2001.

A social factor (item 21) classified as a sociological cause (item 2) in Table I, is related to the effects of education (item 211), of civilization: “when the people begin to reflect upon their lot, they become aware of a host of needs they had not felt previouly that cannot be satisfied without recourse to the resources of the state. That is why public expenditures generally seem to increase with civilization, and why taxes rise as enlightenment spreads” (ibid., p. 242). It must be noted that the analysis of the financial impact of the needs created (item 2111) by democracies is also made by Wagner (Wagner, Reference Wagner1890): after the impact of industrialization and of urbanization, which follows from that, he refers to the pressure for social progress in order to justify the law of increasing public expenditures. The values of each society (item 2211) that Tocqueville links to customs (item 221) form another cultural factor (item 22). Their impact on expenditures is, as we have indicated, different from one nation to another. Certain nations like public celebrations and “do not regret seeing millions go up in smoke” (ibid., p. 245); Americans prefer material advantages above ornaments in architecture.

In the passage relative to universal suffrage, Tocqueville adds that, fiscally speaking, “the extravagance of democracy” depends on the distribution of property, which thus acts as a structural cause (item 31). We will find this economic factor (item 3) in the socio-economic study of the classes of the Old Regime. It is referenced here as assessable matter (item 3111) relative to land patrimony (item 311). We must emphasize that the intervention of this variable has a general significance for fiscal sociology, even if its validity is proper to fiscal systems based on the taxation of property. In fact it lays down the relation between the economic dimension (the characteristics of patrimony), the fiscal technique (based here on land tax) and the resources available to finance public expenditures. In Democracy in America it is specified that when property is concentrated, as in England, taxes and thus expenditures are structurally assisted. If it is dispersed, as in France, and even more at that time in America (“where the vast majority of citizens own property”, ibid., p. 241), the effect of this economic variable, defined by the distribution of this taxable matter, is the reverse.

Echoing the French debate of 1831 relative to public management in the United States, Tocqueville devotes a specific discussion to the salaries of civil servants in democracies. He refers to a cyclical economic reason (item 32), “that has nothing to do with the instincts of democracy in general” (ibid., p. 243), in order to explain that public agents can on the average be well remunerated: in fact, in the economic context of the American labor market (item 321), “the state would find no one to fill these lower public offices if it were not willing to pay its officials well” (ibid., p. 243). The cost of labor (item 3211) is a variable that explains the differences in remuneration of public agents. Its impact on expenditures for State personnel can vary from one country to another.

With this cyclical factor put aside, a factor of a cognitive sort (item 4), namely the preference (item 411) for the concrete (item 41) (Leroy Reference Leroy2003, p. 236), is mobilized to formulate another structural tendency of personnel expenditure in democracies.Footnote ¹² Cognitive psychology has shown the importance of this factor in human reasoning.Footnote ¹³ To establish the salaries of public agents, the people “always think of their own needs, and this comparison enlightens them” (ibid., p. 243). It really concerns a cognitive factor, drawn from concrete information on the level of remuneration among one’s colleagues. The idea is that the social actor, the citizen (item 4111), acts according to his own concrete situation, “he will think of his simple home and of the modest fruits of his arduous labor” (ibid., p. 243). This cognitive rationality has a contrasted effect for the budget of democracies. It leads to paying less for high-level executives than in aristocracies because, for the poor, “a sum that might seem modest to a wealthy man seems prodigious” (ibid., p. 243). One can understand why, due to such an error of perspective, it was sometimes thought that democracies were less spendthrift. The same cognitive factor however explains that public agents in general, except the high officials, are rather well remunerated by the nation in a democracy: “since they live quite comfortably themselves, it seems natural that their servants should share their comfort” (ibid., p. 243).

With regards to the fiscal logic of the working class, Tocqueville rejects the objection according to which the representative system curbs the popular passions because “in the long run, however, one can be sure that the representatives will always reflect the spirit of the people who elect them” (ibid., p. 241). He firstly thinks that “if the people had a proper understanding of their own interest, they would spare the fortunes of the rich because they must soon feel the effects of any financial difficulties they create” (ibid., p. 240). We will not dwell here on refuting the idea, whose modern scientific caution comes from Laffer, that taxing the rich is bad (Leroy Reference Leroy2003, Reference Leroy2008). In fact, Tocqueville, while defending this erroneous concept, invokes (quite rightly) the cognitive factor of the preference (item 411) of the short term (item 42) in order to explain the democratic budgetary logic: “is it not also in the interest of kings to make their subjects happy, and of nobles to know when to open their ranks? If long-run interests had always trumped the passions of needs of the moment, there would never have been tyrannical sovereigns or exclusive aristocracies” (Tocqueville Reference Tocqueville2004, p. 240). Democratic peoples, as regards taxation, follow here the natural tendency of man to choose an immediate gain (item 4112), especially since the risk of a negative effect is far off and, we can add, uncertain. They tend to tax the other classes in order to help the expenditures of the democratic State. In this context, cognitive variables tend to increase public expenditures.

3. The tendency law of the growth of expenditures in democracies

The systematization of Tocqueville’s analysis stresses nine variables that are distributed in four dimensions (causes): political, sociological, economic and cognitive (cf. Table I).

Tocqueville’s model therefore has an interdisciplinary character which anticipates the thinking of the founders of fiscal sociology. All the political factors (items 11, 12 13), the sociological factor of the education of the people (item 211), and the cognitive factors (items 41, 42) of human rationality come together to explain “why public expenditures inevitably tend to increase when the people govern” (Tocqueville, Reference Tocqueville2004, p. 238). The exceptions are: the economic factors (items 31, 32) whose effect is logically varied and the cultural factor (item 22) which is marginal for the budget. In relation to the pioneering work of Tocqueville who anticipated Wagner’s Law, the phenomenon of public expenditure growth corresponds to what we have to call Tocqueville-Wagner’s tendancy law.

4. The validity of the democratic theory

Within the limited framework of this article, only a certain number of ideas are proposed in order to show the importance of Tocqueville’s democratic theory. There is a variety of studies on public sector growth, especially in the field of economics, which insist on the same set of variables. However, in general, two major issues subsume particular explanations. They lead to the development of two theories, based on which the interventionist state is bound to capitalism or to democracy. The capitalist theory of the interventionist state was presented by Wagner, who stated that public spending growth is linked to the needs of industrialization and urbanization. For him, the point of departure is established by tax revenue, where economic growth creates revenue in order to finance needs. The democratic theory of public finance goes back to the pioneering work of Tocqueville who, as shown above, considers the cumulative effect of political, sociological, economic and cognitive factors. Two points are important: first, both authors share the conviction that this evolution constitutes progress;Footnote ¹⁴ second, they differ more by the field of explanation (capitalism vs. democracy) and less by their approach as a variety of factors is studied by both of them.

Concerning the validity of the growth of public expenditure in general, Table II shows the percentage ratio of GDP for 7 main OECD countries: if a long-term tendency is observed with regard to the increase of public spending, we also see that it is not the case for France, Italy, or Germany from 1995 to 2004. If we turn to the financing of expenditure, namely the OECD revenue statistics, we do not find a continuous increase, even if the historical tendency is confirmed. Indeed, long-term observations (source: OECD, 2008) conclude that a continuous increase of the tax revenue rate is associated with periods of relative stability. Therefore, the average rate (in percentage of GDP) within the OECD countries is 25.6 % in 1965, 29.4 % in 1975, 32.7 % in 1985, 34.8 % in 1995, and 35.8 % in 2005. Between 1965 and 1975, the average increase in the tax revenue rate is 3.9 points for all OECD countries except Italy, whose indicator is slightly lower. Between 1975 and 1985, almost all the countries, except Iceland, Turkey and (very slightly) the United States, experienced an average increase by 3.3 points. Between 1985 and 1995, the average increase was 2.1 points but, this time, the rate dropped in 10 countries (and grew in 20). Between 1995 and 2006, the average increase of 1.2 points is weaker, with a decline in the other 10 countriesFootnote ¹⁵.

Table ii Evolution of public spending (in percentage of GDP)

Source

Carone, Schmidt, Nicodème, 2007.

Concerning the causes of public expenditure, Wagner’s law (1835-1917) refers to industrialization and urbanization as conditions for continuous growth in public spending. The State intervenes increasingly by spending on general administration, police, education, social action, and infrastructure. Economic growth generates revenue and entrains spending by stimulating demand for public goods (prority of revenue). An empirical relation is found between established GDP/person and fiscal pressure in developing countries, but the relation between economic growth and public spending does not go in the direction described by Wagner.Footnote ¹⁶ Sociologically, this approach is not very well adapted to post-industrial society, but it clearly indicates the historical trend of expenditure growth while focusing on (following the example of Durkheim’s The Division of Social Labor) socio-economic differentiation and manifestation of new social needs.

Thus, the Tocqueville’s democratic theory is better. Indeed, the evolution of public spending and revenues is related to the intensification of interventionist democracy which takes care of the poor, education, health, unemployment, pensions, and family. DemocratizationFootnote ¹⁷ emerges along with the extension of social security and, thus, with the extension of public spending dedicated to social welfare in the broad sense. It justifies an income redistribution policy (taxation and/or social security transfers). This phenomenon is valid for all developed countries, including countries with liberal Welfare State traditions. According to Lindert’s seminal historical study (2004), the expansion of the “political voice” is the best explanation of the growth of social spending: regardless of national specific welfare, expenditures of the OECD countries were insignificant before 1880, then progressed slowly until World War II to grow considerably until the 1980s, before stabilizing or declining slightly as a result of the neo-liberal questioning of the Welfare State. In a study of 10 westen European countries from 1860 to 1938, Aidt and Jensen (Reference Aidt and Jensen2009, p. 379) confirm the impact of democracy on public finance: the extension of the voting franchise is correlated to the increase of public expenditure and to the tax structure. Using pooled time-series cross-national data from 113 countries (1971-1997), Ross (Reference Ross2004, p. 244) also shows that taxation leads to democratization: the rise in the ratio of taxes to government spending is associated with a subsequent rise in the level of democracracy.

The major tendencies of the Welfare State are well known, in spite of certain contradictory results.Footnote ¹⁸ Initially, social spending was justified by the 20^th century democratic criticism of the extremes of industrial society. With the strengthening of democracy (Rosanvallon Reference Rosanvallon1981), social rights accompanied political rights through social citizenship (Marshall Reference Marshall1950). The first period is the emergence of the Welfare State in industrial nations during the periods at the end of the 19^th century and World War II. The second period is known as the golden age of the Welfare State. It is marked by the post-war growth and expansion of Keynesian politics, which legitimized public action (Webber and Wildavsky Reference Webber and Wildavsky1986, p. 562) by spending over economic action. The last period, starting from the crisis of the 1970s, is the one of an ideological questioning of the Welfare State. If welfare expenses largely explain public expenditure growth in developed countries, and thus tax revenue increases, this effect is largely based on the system of social welfare financing which, depending on the country, either relies on public or on private funds. However, the amount of welfare spending remains high in numerous countries, in Europe in particular. The European Values Surveys indicate that, in spite of national differences, people remain attached to the Welfare State. Across OECD countries, the traditional institutions of the Welfare State remain popular, despite high tax rates (Bay and Pedersen Reference Bay and Pedersen2006, p. 421). Even US public opinion supports specific welfare programs associated with a humanitarian sociopolitical ethos (Feldman and Steenbergen, Reference Feldman and Steenbergen2001). A study of 14 OECD 1980-2000 democracies (Brooks and Manza, Reference Brooks and Manza2006) shows that mass policy preferences are important for the maintenance of Welfare States, because rulers must take public opinion into account, especially in the liberal Welfare State. In general, people are in favour of social spending (Lewis and Jackson Reference Lewis and Jackson1985, Bergman Reference Bergman2002, Kemp Reference Kemp2002).

In the context of economic globalization, Tocqueville’s analysis of interventionist democratic State justifies the elaboration of a democratic theory of political choice opposing the theories of market efficiency and public choice.

5. Globalization and the resilience of the democratic fiscal State

The impact of globalization on taxes and social policies is the subject of a methodological and theoretical debate. According to the “market efficiency” theory, or to the thesis of State retrenchment (Tanzi Reference Tanzi1995), economic globalization (EG) forces policy makers to compete for investment by cutting taxes: the Welfare State is undermined by EG because of capital flight, tax dumping and competition (relocation of businesses) and the reduction in the power of political parties and trade unions. On the other hand, the “compensation theory” (Pierson Reference Pierson1994, Garret Reference Garret1998, Scharpf Reference Scharpf2000), (Pierson Reference Pierson1994, Garret Reference Garret1998, Scharpf Reference Scharpf2000), insists on the resilience of the Welfare State, which stuggles against the negative effects of EG (insecurities, inequalities). Although empirical data on this issue provide contrasting results, the efficiency of market theory is not confirmed (cf. Table III).

Table iii The effects of economic globalization on social spending

Here, I interpret the approach of “power resources” (labor mobilization) (Korpi and Palme Reference Korpi and Palme2003) as a particular case of the democratic theory. According to the empirical studies of power resources, economic logic is less relevant than political factors related to power resulting from the conflicts of classes on the labour market: the strength of labor force movements favors social-democrat types of the Welfare State. However, inreality, we find the (general) explanation in the possibility of having political voice in a strong democracy.

Of course, other factors also appear to have an effect. For example, the particular role of war in the construction of national financial systems in European countries is observed. This phenomenon is also observed in the aftermath of the two World Wars which had significant impact on the financial systems of the 20^th century (Peacock and Wiseman, Reference Peacock and Wiseman1967). The Welfare State also depends upon economic development which shifts the demand to services such as health and education. But the political theory of political choices (Leroy Reference Leroy2010), freely inspired by Tocqueville’s model, seems a good way of explaining the “social demand.” From an ethical point of view, Tocqueville’s liberalism leads him to contrasted judgments: as we have seen, improving the well-being of the people through expenditure on social assistance, education, etc., is considered “as useful and reasonable” (Tocqueville Reference Tocqueville2004, p. 251). But such taxation “would spare the fortunes” (ibid., p. 240). The same analytical richness is applied to the study of the two phenomena of administrative centralization and political revolution which upset the institutional, political and social equilibrium of the Old Regime.

1. Financial centralization

Tocqueville describes the bureaucratic continuity between the Old Regime and those that came after the Revolution. Faithful to his “too strong a taste for freedom” (ibid., 1998, p. 86), he denounces the political misdeeds (cf. item 1 in the Table IV) of the institutionalization (cf. item 11 in the Table IV) of administrative centralization (item 111) by the monarchy. The 1789 Revolution is however welcomed by Tocqueville as a tentative by the French to conciliate equality and liberty.Footnote ²¹ The vote on taxes is quoted as one of the “the conquests of ‘89” that will afterwards be betrayed by “silent and servile assemblies” (ibid. p. 86).

The authorities instituted to implement the concentration of powers are the conseil du roi or Royal Council, the controller-general, the intendants and their subordinates. Public finance constituted the privileged domain of the centralization process,Footnote ²² as is shown by the examination of the tax and budgetary competences of the quoted authorities (cf. item 1111 in the Table IV). The Royal Council administered the country. It is found “at the center of the kingdom, near the throne” and it united “all powers” (ibid., p. 119). It fixed and distributed taxes between the provinces in a discretionary way. It exercised supervision on expenditure, intervening even “for permission to spend 25 livres” (ibid., p. 131). Next to the Council, the controller-general was the central agent that executed and followed all interior matters. “Gradually, he had gained control of everything which had to do with money, i.e., almost all public administration” (ibid., p. 120), surveying the expenditure of “even a charity workshop located in the depths of a far-distant province” (ibid., p. 138).

These authorities were relayed in every province by the intendants who were nominated and removable by the central authority. Tocqueville, quoting Law, points out that the kingdom was governed by thirty intendants on whom “the happiness or misfortune of those provinces” (ibid., p. 120) was based. In the case of new taxes, the Council, the controller-general and the intendants decided on their own. In the case of old taxes, the old fiscal authorities had not been abolished; but, as in the case of the taille, it was the intendant who divided the tax between the parishes, directed the elected collectors, and decided on reprieves and discharges. The collector of the taille, often still elected, levied the taille under the direct order of the intendant. Tax litigation came under the exclusive competence of the intendant and the Council. As regards expenditure, a few independent local bodies of the central authority remained, especially for public works, but here again the reality of the decision belonged to the intendant (helped by the central body of the ponts et chaussées). As regards help for the poor, the Council decided on the part of the taxes destined to help the poor that the intendant was instructed to distribute. He regulates, controls and follows in detail all public affairs, notably financial affairs, as is shown by the administrative supervision of towns. That administrative supervision was particularly visible in financial matters.

Administrative centralization positioned Paris as the most important town of the country.Footnote ²³ This preponderance was further reinforced by tax incentives (item 1112), because “the shackles of industry forged by the contemporary tax code were less heavy in Paris than anywhere else in the kingdom” (ibid., p. 148). The financial interventionism of the State was established (item 1113): “to this extent had the government already exchanged the role of sovereign for that of guardian” (ibid., p. 124). “Having thus replaced Providence, it was natural that everyone would invoke it in his own need” (ibid., p. 144). Help for the poor, already discussed, indemnities for agriculture, help for industries, etc. constitute illustrations of this change. The establishment of a strong centralized State, notably through financial institutions, is explained by the will of the royal power, meeting the aspirations of the people, to weaken the nobility. By destroying the liberty (item 112) given to institutions representing a division of powers,Footnote ²⁴ administrative centralization encouraged the Revolution. Centralization participated in the development of the democratic classes. It also participated in the division of social classes and the end of the liberties of intermediary institutions.

2. The destruction of political freedom by the financial authority

The theme of political freedom is at the base of all of Tocqueville’s writings.Footnote ²⁵ In The Old Regime, he maintains that only political freedom can remedy “vices” secreted by the democratic tendency to the leveling out of conditions and to “a narrow individualism where all public virtues are smothered” (ibid, p. 87). In order to destroy all political freedom (item 112) capable of constituting a countervailing power, the isolation of classes (item 121 below) is encouraged by the royal power, notably in its struggle against the nobility, this “rival and dangerous class” (ibid., p. 165). The vices of the Old Regime come from “the art which most of our kings praticed, of dividing people in order to govern them more absolutely” (ibid., p. 191). Here again financial reasons intervene, in view of limiting the fiscal competences of intermediary institutions (item 1121); the monarchy wants to avoid submitting itself to an authorization of the Estates to levy taxes: “it was the desire to prevent the nation, from which money was asked, from demanding its freedom back, that made the government constantly alert to ensure that the classes […] remained apart from each other, so that they could neither come together again nor join in a common resistance” (ibid., p. 170).

According to Tocqueville, the division of classes constitutes “the crime of the old monarchy, and later became its excuse; for once all those who made up the wealthy and enlightened portion of the nation could no longer agree with one another […] it was necessary for a master to intervene” (ibid., p. 170). This effect, amply confirmed by the financial institutions, reinforces administrative centralization (item 111 above): “for a little cash one thus deprived oneself of the right to direct, to control, and to constrain one’s own officials” (ibid., p. 168). The correction of financial abuses and privileges, that are the least tolerated, becomes impossible “if it had been permitted to discuss them” (ibid., p. 169). These “new oppressions” would not occur “if they had found rich and educated men alongside the peasants” (ibid., p. 187). The absence of political freedom is therefore harmful for all social classes, while “free institutions are not less necessary to the leading citizens, to teach them their dangers, than to the humblest, to assure them their rights” (ibid., p. 198). Social division is therefore one of the essential causes of the Revolution.

3. Political division of classes and financial privileges

Tocqueville defends political liberalism in order to counterbalance the excess of the leveling out of conditions which, for him, defines democracy. Paradoxically, this liberal thinker concentrates on an analysis of classes of the Old Regime, with certain formulations worthy of Marx: “Doubtless there were individuals who did not fit this description; I speak of classes, they alone ought to interest history” (ibid., p. 181). In Table IV, the division of classes (item 121) refers to politics (item 1) because of the will of the central authority to divide the classes by playing on financial privileges. It is nevertheless classified in the table as a socio-political field (item 12) because it also describes the hierarchization and isolation of classes in society.

On the eve of the Revolution, the clergy had above all a political role (item 1211), the Church being a political institution (more than a religious institution). This analysis is supported by taxation because the clergy had conserved annual assemblies deciding on taxation. The moral powerlessness of the clergy is a factor of the division of social classes, and what we could call the decomposition of social links. The clergy is also a class on its own because of its financial privileges: “it occupied the strongest and most privileged place in the old society” (ibid., p. 97). Unlike other superior classes, it maintained a presence in the countryside amongst the peasants. Through the priests in the countryside, the clergy would have become “the leader of the rural population” (ibid., p. 182), if its privileges that attached them to the political hierarchy did not give rise to the hate of the people.

The nobility (item 1212) was no longer an aristocracy useful for society,Footnote ²⁶ and was isolated from other classes, having lost its action on the prince and on the people. It was politically deprived of its functions and its power. In fact, it no longer governed the countryside because, notably, it was not the lord of the manor, but government officials, that levied taxes. As attested by the weight of the capitation or poll tax in Paris, the nobles prefered service of the king to administration of land in the countryside, of which they lacked ownership.

The nobility had become “a caste” (ibid., p. 156) through a system of financial privileges.Footnote ²⁷ Tax exemption had become “the most hateful of all these privileges” (ibid., p. 156) and demonstrated the division of classes: “inequality of taxation is the most pernicious and the most apt to add isolation to inequality” (ibid., p. 157). Isolated from the peasant class that it no longer governed, the nobility was also isolated from the bourgeoisie (item 1213), notably by its tax privileges: “every year, therefore, the inequality of taxation separated classes and isolated individuals more deeply than ever before” (ibid., p. 165). In the 18^th century it was no longer bound by the feudal obligation in case of war, but disposed of an “immunity from taxation” (ibid., p. 150) that was even stronger. It no longer supplied services in exchange for “its special rights” (ibid., p. 117). Taxation was therefore the cause of these unjustified privileges that socially delegitimized the nobility. Inequality of taxation was felt much more on the eve of the Revolution thus forming a structural factor for triggering it off: “when the nation […] permitted the kings to establish a general tax without its consent, and when the nobility had the cowardice to allow the Third Estate to be taxed provided that the nobility itself was exempted […] was planted the seed for almost all the vices and abuses which […] caused its violent death” (ibid., p. 164). Finally it must be noted that Tocqueville does not consider that ennoblement solves the problem;Footnote ²⁸ on the contrary, it increases “the hatred of the commoner for the noble” (ibid., p. 158).

Next to the separation between nobility and bourgeoisie (item 1213) there is also the isolation of the bourgeoisie with regards to the peasant class: “almost the entire middle class lived in towns during the old regime” (ibid., p. 158). Tax reasons play a very important role here as well, because “the bourgeoisie gathered in the towns has a thousand ways of lessening the burden of the taille, and often escaped it entirely” (ibid., p. 159). They escape from the major and perilous responsibility of the parish collector of the taille.Footnote ²⁹ In general, they were not subjet to the octroi, the tax on the circulation of merchandise. Pushed by the very French passion for public posts,Footnote ³⁰ they were often occupants of positions that included fiscal exemptions, that the monarchy sold in order to meet its financial needs.

The peasant class (item 1214) found itself isolated from the superior class, without anybody present to explain that: “there is no longer anyone but the central government which is interested in the village […] in making a profit out of it” (ibid., p. 183). It was subject to the arbitrary character of the tax burden and of the old feudal rights. Using, as in all his work, the comparative method, Tocqueville emphasizes that in France it is the poor who support the fiscal burden (see below). In spite of some improvements, public action did not succeed in relegitimizing political power.

4. The delegitimizing of public action in financial matters

During the years preceding the Revolution, public action (item 13) marked a turning point, even if the erring ways caused by financial needs continued to undermine the foundations of the political system. The royal power had a fresh desire to fight against poverty and to ensure economic prosperity. The government (item 131) aimed “to increase the public wealth” (ibid., p. 219). It was measured “the best” in the less stricter application of fiscal law (1311): “the law was still as unequal, as arbitrary, and as harsh as in the past, but all its vices were tempered in execution” (ibid., p. 219). Less severe actions were taken against offences, and sanctions were more moderate. From now on the king would take into account public opinion and no longer act in an arbitrary manner: “absolute by the letter of the laws, he was limited by their execution” (ibid., p. 221).

Political change was also manifested by the economic and social action of the State.Footnote ³¹ The expenditure linked to public intervention increased (item 1113). The dynamism of private individuals was encouraged by public action which modified the role of the intendant whose missions became more diversified: roads, canals, agriculture, manufacturing, funds for charity workshops, indemnities for peasants who were wronged by hunting rights, etc.

Public action also took place in the area of institutional reform (item 1312). Nevertheless the failure of attempts at reform contributed to delegitimizing the regime. Turgot thus proposed important changes, particularly in the financial field. In 1776, his proposition to replace the corvée by a local tax failed. According to Tocqueville, the failure was certain because “the inequality was immediately transformed with it and went into the new tax” (ibid., p. 187). The reform of Calonne in 1787, which concerned the taille, by aiming for the reduction of the power of intendants to the advantage of the assemblees, again shook the institutional base, while “the inequality of taxation” (ibid., p. 238) persisted.

Tocqueville is finally interested in the financial needs of the monarchy, a factor which is often retained by analysts as the principal cause of the Revolution: The financial expedients (item 1313) of the monarchy were qualified as “monstrous fertility” (ibid., p. 166) or as “violent and dishonest pratices”. The vices of the Middle Ages that remained in vigor generally originated from “a financial expedient that turned into an institution” (ibid., p. 167). The retained examples demonstrate this well. Taxes on land transfers (or franc-fief) were constantly rising. The right to work was heavily taxed through corporations. The sale of municipal liberties (or offices), regularly abolished and then reinstated, constituted a “shameful aspect of the old regime” (ibid., p. 125) that was a waste of town resources. The compulsory subscription to royal loans ruined numerous institutions (hospitals, towns, etc.). The venality of public offices, for example numerous offices linked to courts, appeared as “the need to disguise from the eyes of the French the taxes which no one dared reveal in their true light” (ibid., p. 169). The financial privileges of the occupants of a position, such as exemption from the taille, reinforced the sentiment of inequality. Arbitrariness was thus the rule: expropriations were not always compensated, or they were “arbitrarily and late” (ibid., p. 231). The abolishment of the jurandes and their reestablishment disturbed relations between masters and workers.

Tocqueville nevertheless did not give to the financial crises the status of direct cause of the collapse of the Old Regime. Financial needs are covered by the described expedients in order to prevent the coming together of the General Estates and the opposition of the nobility to taxes and to the abolition of their privileges. As we have seen, this policy participated in “the crime of the old monarchy” (ibid., p. 170) constituted by class division and by the stifling of political freedom that resulted from it. This point is important for financial sociology because numerous authors place, wrongly as we shall see, the crisis as the univocal and determining variable of social change. The venality of offices did not concern the intendants who were indispensible for the centralization of power which is a determining process in the eyes of the author. This has a complex effect: on the one hand, it undermines the legitimacy of institutions that are degraded and sold off cheaply according to financial needs; on the other hand, it also maintains a formal counterpower to administrative centralizationFootnote ³² and it keeps up a spirit of independence.

Public action, even if it improves the general prosperity and conditions of the people, paradoxically leads to an acceleration of the revolutionary process by provoking cognitive mechanisms of relative frustration (see below). Its incapacity to succeed in institutional reform produces a fortiori the same effect. In short, the venality of public functions and the diverse financial expedients used by the authorities reinforce this cumulative process of delegitimizing, by highlighting the arbitrariness and fragility of the system. In this context, the improvement of France’s socio-economic situation did not act in favor of the stability of the regime.

5. The leveling off of socio-economic conditions

Socio-economic variables (item 2) are at stake in order to understand the stratification of society (21) at the end of the 18^th century. A democratic process of leveling off of conditions (item 211) of social classes was taking place. On an economic level, the condition of classes came closer together. Here one must take into consideration the factor, important according to Tocqueville, of the redistribution of landed property (item 2111). In France, as is confirmed by land tax documents of the time, property was from then on well apportioned. The importance of small properties is favourable for the democracy: “the peasant had not only ceased to be a serf, he had become a landowner” (ibid., p. 112). This inequality no longer existed and one must look for the impact of inequality on the Revolution in the existence of unjustified inequalities between classes. The advent of property amongst ordinary people was one of the principal causes of the “hatred so fierce” (ibid., p. 116) of feudal rights that persisted. Here the fiscal factor was still very important, because the peasant landowner was sensitive to the often unjust burdens of ownership (dîme or tithe, ground rents, etc.). The other cause, already mentioned, was the end of the political role of the nobility that disposed of unjustified privileges, notably in the tax field.

Next to property, Tocqueville indicates that the inequality of wealth between classes was reduced (item 2112) in the 18^th century. The division of the classes, the educated bourgeois elite (item 2113), enriched but moved aside from power, the jealousies of positions within the nobility,Footnote ³³ the discontent of the intellectuals, the burdens weighing on small property owners characterized by a independant spirit, left the whole nation to adhere to the idea of equality. Thus through equality, the France of the end of the Old Regime came closer to modern France. It was already closer because, for Tocqueville, democracy means this process of leveling out of conditions. This contradiction, when speaking like Marx, between factual equality (or at least the diminution of inequalities) and legal inequality explains why the privileges of the nobles appeared from then on to be intolerable: the privileges of the nobles coming from the feudal system were no longer justified by their political role; feudality ceasing to be “a political institution” useful to society became one of the privileges that were critically viewed in spite of their real impact.

With regards to the economic situation (item 22), public prosperity (item 221) improved on the eve of the Revolution. Tocqueville bases his argumentation on the improvement of the indicators of the standard of living (item 2211), of economic activities (item 2212), and of population size (item 2213). He also refers to the tax indicator of the rise of excise duties (item 2214). Public action expressed a change (see above) with the purpose of improving the economic and social situation of the people by implementing a policy of a more just taxation and of intervention expenditure. In comparison to other countries, the fiscal privileges drawn from the ancient feudal rights at the end of the 18^th century “were much heavier” in the rest of Europe (ibid., p. 116). The objective weight of taxes was lighter in France than in EnglandFootnote ³⁴ : “in eighteenth-century England, it was the poor man who enjoyed tax privileges; in France, it was the rich” (p. 164). By taking account of the fiscal repercussion, that led in particular to making the nobles subject to taxes through farm rents, inequality was “more apparent than real” (ibid., p. 156). Cognitive factors became involved in the social discontent.

6. The cognitive factors

The cognitive reading of Tocqueville’s work is rich with lessons, even if, as is often the case with our thinker, it cannot be based on an explicit theory but only on punctual observations. In any case, the analysis is connected, not with a simple psychology of man, but with a sociological study (of social science) of cognitive rationality. The general traits of human reasoning are always linked to the social or historical context that puts them into operation and gives them their sociological meaning; the reasons, even objectively wrong, are studied from the point of view of the actor in order to search for the logic in the context. For example, the imitation principle is invoked as the cognitive basis of ideological theories (see below). As a pioneer in financial sociology, Tocqueville regularly uses cognitive determiners (cf. item 3 in Table IV).

The well-known theory of relative frustration (item 31 in Table IV) that underlies several passages of his work can be linked to the cognitive approach. The effects of relative frustration and of concrete injustice increase the sentiment of illegitimacy that the authorities stir up by their behavior. Popular discontent then tends towards violent rupture. The theory of relative frustration accounts for the following paradox: while the situation improves (cf. items 2211 to 2214), the level of discontent increases (item 311). This helps to explain why the Revolution took place at the end of the 18^th century, and not at another moment: “it is not always in going from bad to worse that one falls into revolution […] The regime that a revolution destroys is almost always better than the one that immediately preceded it” (ibid., p. 222). Tocqueville’s masterly demonstration is based almost entirely on the relation between taxation and the sentiment of social injustice.

Discontent, however, increased. The felt tax inequality (item 3111) appeared to be greater, less supportable and was furthermore more visible in France than in other countries. “But in this matter the visible inequality was more galling than the inequality that one actually felt” (ibid., p. 156). The real fiscal impact was not visible and it appeared to the people that the exonerations enjoyed by the nobility increased with the increase of levies such as the taille. The application of tax law was certainly more just (cf: item 1311), but its residual vices appeared to be more insupportable: “the evil has decreased it is true, but the sensivity to it is greater” (ibid., p. 222). The improvement in financial administration made its vices “more sensitive” (ibid., p. 224). The arbitrariness of decisions, the secret of the procedure, the insecurity of financial relations, more and more numerous with the intervention (cf. : item 1113) of the State (lenders, traders, manufacturers, small investors, etc.) precipitated the Revolution in order to reform the financial system.

The relative frustration of the people led to a questioning of the institutions of the Old Regime. It accentuated the aggravation of the sentiment of injustice linked to the perception notably of tax inequalities (cf. items 1211 to 1213). This theory is also pertinent in explaining the geography of the revolution. The Generality of the Île-de-France, where taxes had become more just, more equal (the taille still served as an indicator of improvements), was thus the principal source of the Revolution. It is in fact in the regions where “progress was most apparent” (ibid., p. 222) that the discontent was the greatest. The same logic accounts for the resistance of the Old Regime in the regions that appeared to be lagging (Bretagne, Poitou, Charente, etc.). The theory of relative frustration rejects any determinism of economic and/or financial variables. Its pertinence is that of a brilliant application of the cognitive approach of the relation between the concrete context and the sentiment of tax injustice.

We again find the cognitive principle of concretization (item 32), according to which man prefers (item 321) concrete knowledge of the situation in order to determine himself. This factor, which Tocqueville does not name, is combined with the effects of relative frustration. It intervenes to explain the end of the political role of the nobles and the judgement of privileges. The nobility had so lost its political influence that it no longer intervened in the affairs of the State that provide a real contact with the people and concern its interests, such as the establishing of taxes. The division of classes (cf. items 1211 to 1214), already questioned by the relative frustration, had become illegitimate because of the concrete vision of financial privileges (despite the leveling off of class conditions: cf. item 2111 to 2113). Money privileges were more dangerous than those linked to power because they were measured in a concrete way. Feudal burdens that struck people in their everyday lives appeared to be injust, because “the political part had disappeared; the financial portion alone remained, and sometimes had greatly increased” (ibid., p. 115). In the context of the end of the 18^th century, cognitive factors were added to the blunders of the royal power in destroying its legitimacy. They participated in the diffusion of revolutionary ideology. The failure of the attempts to reform the system and the practice of financial expedients (see above) convinced people in a concrete way that the institutions were inadapted. “The government itself had long worked to make several ideas, since called revolutionary […]. The king was the first to show with what contempt one could treate the oldest and apparently most established institutions” (ibid., p. 230).

7. The particular influence of ideology

One finds in Tocqueville’s work the architecture of an interesting theory of ideology, although he does not use the word directly. In the Old Regime he studies how general theories such as the existence of rules or universal truths applicable to human societies, or the necessity of equality and liberty appear and are diffused. The richness of the analysis of revolutionary ideology (item 4) stands in the way of its classification in a unique category (while in the model of the expenditure of democracy, it clearly falls under politics). In Table IV, it is classified as a distinct cause, with the indication of its links with the other fields (cf. item 11 and 12). Ideology falls under the political field (item 41) because it concerns the major political problems put into question by the theories of equality and liberty . It implies cognitive factors (item 42) as a rational mode of knowledge applicable in the concrete context of the reception of theories (item 421), in this case those of the Age of Enlightenment. It is also sociological (item 43), for example, with the diffusion and then post-revolutionary rejection of anti-clericalism, and especially by taking into account certain social relations (item 431).

The general theory of equality (item 4111) spread easily considering the injustice of privileges and the political division of classes (see above). The absence of political freedom (see above), illustrated by the loss of influence in institutional forums for debate such as the General Estates and the local assemblies, stood in the way of the confrontation of theories to practice. Faced with fiscal privileges notably, the conviction spread throughout the whole nation that equality, and thus political democracy, was legitimate: “there was no taxpayer hurt by the unequal distribution of the tailles who did not feel warmed by the ideas that all men ought to be equal” (ibid., p. 198).

At the end of the Old Regime, the spirit of liberty was still present, according to Tocqueville, in spite of centralization by the royal power and the destruction of political freedom. It took on a more general aspect. Political freedom (item 4112), by nature democratic, was from now on conceived as a right to have an independent life from other equal individuals. The political division of classes, that destroys real freedom, maintained a spirit of independence initiated by the defense of the privileges of every class. The sale of public offices also kept up the taste for political freedom. Finally, the diffusion of private property took place in a context of class isolation that led to the experience of independence thwarted by tax burdens that weighed on property.

Delegitimization also came from the denunciation by the government of the abuses of the system for which it was responsible. Political criticism became a kind of official doctrine (item 4113), a new ideology, for all public authorities. Considering that “the people […] listened without understanding” (ibid., p. 227), taxation flaws were particularly questioned by authorities in public documents. Tax laws that harmed peasants were censured. The organization of work in corporations was described as “the result of the kings’ fiscal greed” (ibid., p. 227). The taille was critized, in particular by those who were exempted from it, as a vexatious process weighing on “the poorest portion”. Inquiries were launched by several provincial assemblies in order to understand the detail of fiscal abuses and privileges that “have disastrous consequences for the farmer” (ibid., p. 229).

Encountering the cognitive rationality of classes (item 42), the ideology proposed general convincing solutions (item 4211) for concrete problems (realism) of the society and politics. The delegitimization of the royal power in the years preceding the Revolution also came from the destabilization of institutions by public action in the field of institutional reforms, which failed, and of finance, where expedients reigned. The monarchy demonstrated that its institutions could change. In another field, that of religion, anticlerical ideology did not encounter the same success because the clergy was despised, not for its moral doctrine, but for its privileges (experienced in a concrete way): the war on religions was only an incident, once the leveling out of conditions were realized by democracy.

The development of international exchanges (item 4311) reduced the credibility of the particular values and principles of every country that was previously isolated in feudal Europe.Footnote ³⁵ Within this precise context, the cognitive principle of imitationFootnote ³⁶ explains the success of the idea that a common rule is fit for all ages and all men. France proposed a convincing way of understanding and interpreting the world with regards to the real context of flaws of the political regime and of the organization of society. Revolutionary ideas spread in all countries, because of their universal character.

The principles of human reasoning are well contextualized in order to indicate their meaning when in action. In this way the elaboration of the ideas of the Enlightenment and of the physiocrats at the origin of the Revolution was attributed to their social position. The social class of intellectuals (item 4312), cut off from the political world, lacked experience and political realism. It was thus inclined to radical criticism and abstract general theories. In the public opinion it became “a political power” (ibid., p. 200) taking the place left by other classes. On the eve of the revolution, the field was free for the reception of the ideas of Enlightenment philosophers and physiocrats. The idea of the need for a radical change was more and more convincing (cognitive); the situation became revolutionary. A strategic dimension (item 4313) was present: every class upholds the ideology of equality in order to justify its struggle against the specific idea of privilege that certain social groups in its midst or other classes put up against it. These factors are combined to form a complex model of financial sociology.

8. The financial model of the revolution

The financial sociology model of the revolution, that we have tried to follow step by step, is complicated to draw up for several reasons. In Tocqueville’s works, the form is agreeable by its clear and literary style, but it does not follow a linear path in the thematic statement that is recurrent while implicating various facts and arguments each time. The factors are accumulated through their effects and are retroactive between them. The analysis mixes the “long-term and general facts” and “the particular and more recent facts” (ibid., p. 195). The short-term causes are linked to the cognitive factors of relative frustration, to the diffusion of the revolutionary ideology and the public action of government, and to the improvement of the economic situation at the end of the 18^th century. The direction of the demonstration, the coming of the Revolution, is well determined by the listed factors that are selected, as we have seen at the beginning of this section, to form a model. The main difficulty lies in schematizing the relations between the intermediary variables, which is carried out in the column “effect” of Table IV. Certain general causes implying several variables become in turn singular variables of other general causes. The model is well based on essentially cumulative effects. It combines political, socio-economic, cognitive and ideological “causes” that are declined in 9 domains (institutional, socio-political, public action, stratification, economic situation, relative frustration, “concrete”, and political, which has the role of a general cause in 1 and in particular in 41). Variables are then linked to these domains through the concerned object.