It is mainly The National Gain, printed and published by Lars Salvius in July 1765, that has caused Chydenius to be viewed as a Finnish “predecessor to Adam Smith”. However, as we saw in the Introduction, judgments of this kind can be misleading. No doubt this short pamphlet written during Chydenius’s extremely busy year 1765 vividly illustrates his extraordinary talent and vision. Chydenius belongs to a group of economic writers common in both France and England during the first half of the eighteenth century, who denounced economic regulation of a kind that in the first of those countries was labelled “Colbertism”. In general, such writers were critical of towns and preferred the countryside. On the other hand, they seldom went as far as the sect around François Quesnay, the Physiocrats, which denounced all forms of work outside the agricultural sector as unfruitful. In particular, they regarded the prevailing state support for manufactories – indeed, dirigisme in its essence – as a partisan policy detrimental to the rest of the economy. Generally they found support for their views in the moral philosophy of natural liberty: regulations most often distorted the natural order of things. On the other hand, they differed strongly concerning the issue of whether luxury consumption was beneficial or evil. They were at best uninterested in the idea that economic growth of a nation could be enhanced with the help of aggressive export policies and a strategy of import substitution; some others were outright critical of foreign trade and regarded that too as an unfruitful activity. The “national gain” did not hinge upon any form of export surplus that a country would be able to catch, but rather upon the number of poor people that could be employed and supported. Hence, they instead favoured agricultural reforms and the establishment of a free market of corn and other agricultural products. No doubt it is within this broad group of economic writers that Chydenius belongs.
Against this background it is perhaps peculiar that Chydenius right at the beginning of his tract states that “the profit of the nation” is determined by the amount “by which the value of exported commodities exceeds that of the imported ones”, especially as § 4 defines the “wealth of a people” as consisting of the quantity of its products, and the quantity of products in its turn depends on the number of workers and their diligence. Is he here still fettered to an old mercantilist prejudice? Be that as it may, Chydenius’s main argument here is by no means to propose that a country should attempt to export for more value than it receives in import. Instead, he argues that a country ought to specialize in what it is best at and can produce with the highest value. If the country’s workers are better at producing agricultural products than iron, it is best that they bring exports of the former to foreign markets as this will create greater incomes and support more people at home. His principal argument is that artificial support for some trades (read: the manufactories) should be denounced, as such support is always detrimental to trades where “the smallest number of people produce commodities of the greatest possible value”.
To a greater degree than the previous tracts, The National Gain seems to have been directly stimulated by Chydenius’s work in the four different committees to which he was appointed by the Estate of Clergy: the General Appeals Committee (9 February), the Fisheries Joint Committee (26 February), the Grand Joint Committee (29 March) and lastly the Appropriations Committee (8 June). To be a member of the Grand Joint Committee was especially prestigious; this body was in fact an extension of the Secret Committee where the most sensitive political issues of the day were discussed. It was perhaps the mundane work of reforming the regulations on fishing that provided him with arguments against regulations on industry in a more general sense. At the start, he was confronted with an almost endless list of regulative measures that had been taken over the years in order to promote fishing. A special state fund was in existence with the aim to support fishing through a complicated system of export premiums and bounties. To make it more complicated, this financial support varied between different sorts of fish; the export of herring to Mediterranean ports seems to have been especially cherished, as well as whale hunting (of which very little catch was exported from Sweden!). This complex system must have been extremely confusing, and not only in Chydenius’s eyes – and quite often contradictory: export premiums were speedily instigated and withdrawn without much thought, it seems. Without doubt he here made a great contribution to reforming the system, as Schauman argues. Eventually his work was crowned with the establishment of a more liberal Fishing Ordinance in 1766.1
The experience Chydenius gained in his work towards reform of the fishing industry can be clearly detected in The National Gain. As a general feature of economic policy, export premiums and production support are condemned by the author for leading to what we today would describe as the opposite of an optimal allocation of resources: premiums for a certain trade drew away hands from such activities as would have been more gainful. Moreover, wares that were in less demand were produced while the production of those in higher esteem was abandoned. Without doubt, this critique could have been directed at most of the trade regulations of the time, including for example the prohibitions that hindered the development of rural proto-industry in south-west Västergötland or Ostrobothnia. Subsidizing manufactories in the cities, by forcing peasants to travel to towns in order to sell their produce and by prohibiting free competition by means of guild regulations, means that the nation will be unable to prosper and increase its population – this is the general conclusion that he draws.
However, such critical remarks on the prevailing system of regulation had also been propounded by other Swedish reform-mercantilists such as Salvius, and perhaps especially by Carl Leuhusen (see the Introduction, pp. 34–7). But more forcefully than anybody else at the time, Chydenius argues that freedom of trade and enterprise is the main propelling force to guarantee that each individual is employed in the most gainful way. It is clear from what he says at the end of the text that he believes that on this point he is saying something novel that has not previously been clearly spelled out. From his work in the Fisheries Joint Committee he drew the conclusion that the discussion should not ultimately be focused on which of various trades is superior – he suggests – but on allowing trades to be free so that every individual can enhance his own private gain as much as possible. This goes beyond what the Physiocrats were saying at the same time: insisting that agriculture was more productive than other trades. On the other hand, without doubt they too argued that allowing individual gain was the best way to enhance production in a country, as also did Turgot; this is obvious, for example, in the discussion concerning the liberation of the corn trade.
The National Gain was most likely written during the period when the readers’ reactions to The Source of Our Country’s Weakness had begun to pour in. As has already been explained, Chydenius responded to his critics with two small tracts, one published in 1765 and the other in 1766. In the first of these, A Circumstantial Response to the Refutation of the Treatise Entitled: The Source of Our Country’s Weakness, he returns to the issue that he presents as novel in The National Gain (which it was not, if we take into account the contemporary French and British literature), namely that the country profits the most if individual gain is foregrounded. How can a stable order be built upon such a seemingly unstable ground? he asks. Contrary to the majority of “mercantilistic” economic writers at the time – even some of the reform-mercantilists – he points out that there is basically no contradiction between the public and individual interest. He points out the similarities between humankind and the ocean, “where one column of water with immense power every moment puts pressure on another, but an equally powerful counteracting pressure nevertheless keeps the surface even and horizontal”. Anyone who tries to make one of the columns higher than the other will surely fail, he adds.2 Although his “liberal” attitudes here seems to point forward to modern equilibrium analysis, one must acknowledge that such statements were not unknown in the pre-Smithian liberal economics propounded by the French économistes as well as by some British writers (e.g. Josiah Tucker and David Hume) in the mid-eighteenth century. Despite Smith’s high reputation as an economic thinker, he is more often portrayed as a synthesizer of ideas than as an innovator.3 He picked up ideas that were circulating at the time and created his own synthesis. Hence, ideas like the ones Chydenius presents in the The National Gain contributed to the new system of political economy of which Smith is held to be the father. The fact that Smith knew nothing about our chaplain from Alaveteli is of course another matter.
Lars Magnusson