Spanish Enlightenment Economics Spain

Spanish Enlightenment Economics, Spain Enlightenment

While France greeted the eighteenth century in awe of The Sun King (Louis XIV) and the splendor of Versailles, its neighbor to the south, Spain, was mired in down-at-the-heels decadence, plagued with stagnation, lagging food production, and per­sistent internecine and interregional struggles for political power. This sad state of affairs was in part the consequence of mercantilist policies, which served the inter­ests of the monarch, the aristocracy, and the church; and in part the consequence of other factors, such as periodic plagues and flight of human capital.' This state of af­fairs led to forms of internal and external regulation which promoted monopolies, skewed resource allocations, and retarded economic growth within Spain. An early and long-lived example of aristocratic rent seeking involved the Mesta organization— a cartel of sheepherders that protected the Merino wool export monopoly. This car­tel, which obtained property rights to migratory sheep "roads" and to tax revenues from shepherding, skewed property rights away from sedentary agriculture and was a limiting factor to town growth in Spain for over 600 years (the cartel was not for­mally abandoned until 1836). These practices and tremendous royal expenditures on wars of conquest and other adventures had the ultimate impacts of bankrupting the Spanish state, forestalling the introduction of the industrial revolution in Spain, and limiting economic growth.

Voices of protest and reform were not absent in the midst of such economic tragedy. A "Spanish Enlightenment" developed and flourished over the last half of the eighteenth century and the first decade of the nineteenth. Much of the literature associated with the enlightenment movement was of necessity surreptitious and those that challenged established economic interests were always in danger of im­prisonment or worse. The Holy Inquisition, very much in action in Spain at this time, opposed any ideas and policies that presented a challenge to Church wealth or au­thority. Reforms or proposals for reform had to be introduced very carefully in order to avoid the harsh sanctions of the Church. Carefully crafted and sometimes anony­mous pamphlets and position papers in the form of cartas (not the more literal "let­ters") circulated underground in the promotion of reforms. Even these would not have been possible without the support of Spain's "enlightened despots," Charles III (1759-1788) and Charles IV (1788-1808), who found support for the state in pro­moting the welfare of the individual and who wanted to make the state independent of the Church.

A number of important social scientists and reformers rose to prominence in this dangerous intellectual stew. These included Manuel Rubin de Celis (1743-?), Gas-par Melchorde Jovellanos (1744-181 1), Francisco de Cabarrus (1752-1810), Pablo de Olavide (1725-1803), and a number of other writer-reformers. One of the great­est of these was Count Pedro Rodriguez de Campomanes (1723-1802), who is at­tributed with writing the Discurso sobre elfomento de la industria popular in 1774, two years before Smith's Wealth of Nations was published. This book was one of the most influential economic works of eighteenth-century Spain and it was, for ex­ample, widely read in Latin America. It led Schumpeter to note that "in view of the date of Campomanes' Discurso (1774) it is not without interest to observe how lit­tle, if anything, he stood to learn from the Wealth of Nations" (1954, pp. 172-173).

Campomanes' contributions, along with his followers and compatriots, were made in two interrelated areas of economic theory and policy: (1) ideas related to liberalism and free trade, and (2) practical reform proposals relating to economic so­ciology and economic education.

Spain Liberalism, Liberal Spain, Enlightenment in Spain

Campomanes and his contemporaries were adamant that economic welfare would not be improved in Spain without a thoroughgoing reform of the system of land-holdings and property rights. Estates were "entailed" meaning that they could not be broken up for sale upon the death of their owner. Great aristocratic family holdings were entailed largely by the practice of primogeniture, a practice which ensured that property was passed down to the eldest son. (In England, Adam Smith railed against similar problems regarding the "enclosures" and problems associated with the "com­mons.") Coupled with the aristocratic and monarchical land holdings were the es­tates held by the Roman Catholic Church. Why was "entail" an economic problem? Because it prohibited widespread ownership of property and the increase in pro­ductivity that it encouraged. Economic efficiency—output of products and ser­vices—could not be maximized when the economy was characterized by concen­trated ownership in the hands of a few.

Campomanes also used the Discurso to argue for self-interest and free trade in input and product markets. Spain, along with other mercantile nations, had instituted a whole system of impediments to internal trade. Movements of persons, products, and inputs were restricted by laws of the craft guilds which limited entry into par­ticular fields. Foreigners were prohibited from working in Spanish industries, thus restricting the introduction of new technologies and foodstuffs. Campomanes promoted free movements of all inputs and outputs within Spain and supported free in­ternational trade with the Americas as well. Price controls—so popular during food shortages in all ages and which had helped promote food riots during the eighteenth century—were also condemned by Campomanes. Jovellanos, Cabarrus, and Olavide held similar ideas.

The twin villains in Spain's stagnation—regulation and high taxation—were clearly recognized by Campomanes and his cohorts. The privileges of the Mesta and the high monarchical tax take were both condemned as were high local taxes. A re­duction in taxes upon peasants was to be accompanied by rising taxes on the aris­tocracy and Church lands.

Spain Economic Societies and Economic Education

Liberalism took practical form in the economic societies and in educational reforms promoted by the Spanish economists of the period. The failure of Church education at all levels, and most especially in the universities, was one major source of the prob­lem of slow growth in the Spanish economy. As one observer has put the matter: "The venturesome reformers in Spain were searching for pragmatic means to develop the country, an education which entailed something other than vapid philosophizing by undedicated and ignorant professors who required students to learn by rote and who had no use for experimentation" (Street 1994, p. 33). The answer, according to the liberal economists was to establish "economic societies"—specialized extra-university institutions—dedicated to particular tasks required for a growing Span­ish economy.

Economic societies, founded after 1775, were often based on foreign models, and examples include the royal Spanish Academy, the Academy of History, the Acad­emy of Fine Arts of Saint Ferdinand, the School of Mines in Almaden, and the Mu­seum and Botany Garden at Madrid. Church-operated universities often exhibited a fear of the sciences, practical and theoretical, and many of the new institutions were scientifically oriented. The Basque Economic Society, for example, established what might be called Spain's first "land grant college," the Seminario Patriotico Vascon-gado in Vergara (see Street 1988). Subjects taught included chemistry, mineralogy, metallurgy, public architecture, agronomy, and political science. Experiments in agriculture, along with new crops and plant culture, helped increase the efficiency of Spanish agriculture.

The practical advantages of these new forms of education led to a belief among the economic reformers that human capital was as important in increasing the pro­ductivity of the Spanish economy as real fixed capital. Jovellanos, in the same year that Smith published the Wealth of Nations, argued that"... the returns to labor, what­ever its object of application, will not be in simple proportion to the number of hands employed in it, but in the combined proportion of this number and of the improvement applied to labor" (1776, p. 10, translated by Street 1994, p. 36). Such ideas and technical advances were shared in exchanges of information with American exper­imenters of the time such as Benjamin Franklin and George Washington.

Other reformers were even more radical. Cabarrus, who was greatly influenced by the French Enlightenment philosophers Rousseau and Voltaire, advocated clos­ing the Church-run educational system and replacing it with a scientifically based secular system. He was particularly interested in the abysmal conditions of public health and burial practices in the Spanish economy, conditions which spread plague-borne disease such as smallpox. (His interest in such reforms clearly anticipated those of Edwin Chadwick in mid-nineteenth century England Cabarrus even condemned Church regulation of "implicit" markets, such as marriage and divorce, striking a very modern note in doing so. These beliefs, along with a staunch support of free speech, brought him to an inevitable conflict with the Catholic Church and its Holy Inquisition. (See the box, The Force of Ideas: Economic Soci­ology in Enlightenment Spain: Cabarrus on Marriage, Divorce, and Prostitution.)

Beset on all sides by opportunists, power brokers, and privileged classes, and at considerable personal risk, the Spanish Enlightenment economists made important contributions to what might be called a "practical" theory of markets centered on the principle of self-interest, some of which anticipated the Wealth of Nations of the same era. Like Smith, these writers set forth practical remedies for combating stagnation and removing impediments to economic development. The importance and economic vitality of human capital acquisitions and reform of the educational system in order to equip Spain for industrial development in the nineteenth century were par­ticularly durable insights.