Foutu Maximum the Political Economy of Price Controls and National Defense in Revolutionary France

41 Pages Posted: 26 Mar 2022

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.

Keywords: Price controls, War, public choice, economic history

Suggested Citation

Rouanet, Louis, Foutu Maximum the Political Economy of Price Controls and National Defense in Revolutionary France. Available at SSRN: https://ssrn.com/abstract=4066998 or http://dx.doi.org/10.2139/ssrn.4066998

Louis Rouanet (Contact Author)

Western Kentucky University ( email )

1 Big Red Way
Bowling Green, KY 42101-3576
United States

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