[The Editors' Verdict]What It Means to Become a Successful Nation

Published 25 Aug.2020 12:10(KST)

The revolution in France occurred in 1789. Until the 1770s, before the revolution, France had achieved development in commerce and industry comparable to that of England. At that time, France's population was about 25 million, the largest in Western Europe. England's population, including Scotland and Wales, was about 9 million, nearly one-third of France's. With a large population came a correspondingly large potential market.

However, before the revolution, France was not a unified country as it is today. Many remnants of the feudal system remained. Outside the limited area centered around Paris, there were many regions where the central government's authority could not be properly exercised, such as duchies and autonomous territories of Catholic bishops. For a considerable period, the western Atlantic coast of France was a fiefdom of the English royal family. The Hundred Years' War (1337?1453) was a dispute over the French throne with England, but it was also about fiefdom issues. Because the country was so divided, different taxes and tariffs (transit taxes) existed in each region. This structure prevented the realization of the market's potential. Within one country, tariffs were imposed on trade with other regions as if dealing with foreign countries. Jean Baptiste Colbert (1619?1683), the finance minister under the Sun King Louis XIV, attempted to establish free trade at least around the Paris area, but this was only partially successful.

The revolution swept away such feudal divisions. The revolutionary government established a truly unified nation overseeing Paris and all provincial areas. By abolishing internal tariffs throughout the country, it guaranteed free trade. Tariffs were imposed only on trade with foreign countries. The state was finally able to implement policies at the national level. However, the French Revolution did not only bring beneficial innovations to the country.

Just over 100 years after the revolutionary turmoil had settled, in 1910, France's population was 39 million, while England's was 40.9 million. During that period, England's population had increased more than fourfold (300%), but France's population had increased by only 50%. Meanwhile, in 1900, the agricultural population in England was 7%, but in France, it was 43%. The share of agricultural income in total income was 5% in England but 35% in France. In the same year, England had 50 cities with populations over 100,000, while France had only 15.

Although this is entirely different from 20th-century history, why did the Industrial Revolution progress more slowly in 19th-century France compared to England? There are various theories about this, but some common factors exist. First is war. The indiscriminate Napoleonic Wars and defeats following the French Revolution caused enormous losses in manpower, territory, and the national treasury. There were also consequences from the defeat in the Franco-Prussian War of 1870.

Next, among the various systems introduced after the revolution, many hindered capital accumulation. At that time, the French people harbored deep distrust and resentment toward the government's tax policies. Therefore, tax evasion was widespread, and to secure fiscal revenue, tax rates on exposed economic activities had to be raised progressively. Unlike in England, the property rights of small farmers were excessively protected, making land consolidation and productivity improvements in agriculture nearly impossible.

The current situation unfolding in this country hints at the ominous consequences of the measures taken after the French Revolution. The national treasury is being squandered and taxes imposed as if at war. It is well known that dividing large corporations and small and medium enterprises, which should be a matter of harmony, is suppressing investment. I do not want to demand looking a hundred years ahead. I want to ask if it is impossible to see even after the pandemic. We must not forget that today's choices determine future history.