Why Wall Street needs a Napoleon to shake it up

Or, how "The Count of Monte Cristo" informs our understanding of the financial crisis.

Published April 8, 2009 10:00AM (EDT)

My children and I have been reading a chapter of Alexander Dumas' "The Count of Monte Cristo" each night after dinner, a pastime requiring frequent discursions into Napoleonic history and the implications of the French Revolution, which always gets everyone fired up and ready to roughhouse right before it's time to brush teeth. Last week, we had a particularly stimulating discussion while wrestling with a passage in which Villefort, the deputy crown prosecutor of Marseilles, who will soon be sacrificing the happiness of the innocent hero, Edmond Dantes, on the altar of his own crass ambition, says some provocative things about the exiled-on-Elba Napoleon Bonaparte to a roomful of unrepentant Royalists.

"... Napoleon is the Mohammed of the West. For all those masses of common people -- though with vast ambitions -- he is not only a lawgiver and ruler, but also a symbol: the symbol of equality."

"Napoleon!" the marquise exclaimed. "Napoleon, a symbol of equality! And what about Monsieur de Robespierre? It seems to me that you are appropriating his place and giving it to the Corsican. One usurpation is enough, surely?"

"No, Madame," said Villefort, "I leave each of them on his own pedestal: Robespierre in the Place Louis XV, on his scaffold, and Napoleon in the Place Vendome, on his column. The difference is that equality with the first was levelling down and with the second a raising up: one of them lowered kings to the level of the guillotine, the other lifted the people to the level of the throne -- which does not mean," Villefort added, laughing, "that they were not both vile revolutionaries..."

By the time one has explained to one's children how a French Revolutionary Army general who seized absolute power and made himself an emperor is considered by some to be a force for liberty and justice throughout Europe, well, let's just say it's well past bedtime and the kids' brains are about to explode. Can we just get to the part where Dantes gets his revenge, puhleaaaase!?

And of course, they have a right to be skeptical -- the impact of the French Revolution on the rest of Europe's economic and democratic development is hotly contested among historians and economists to this very day. Some conservatives even blame the Revolution for France's failure to industrialize as quickly as England. My kids haven't yet learned to ask to see the data behind their father's pronouncements, but they will soon enough if I keep going off half-cocked about Napoleon's contributions to modern democracy and capitalism.

Except, glory be, thanks to a tip from Chris Blattman's blog I have just read an upcoming blockbuster soon to be published in the American Historical Review, "From Ancien Regime to Capitalism: The Spread of the French Revolution as a Natural Experiment," in which Daren Acemoglu, Davide Cantoni, Simon Johnson (yes, that Simon Johnson) and James Robinson present some hard data supporting the theory that the conquests made by the French Revolutionary Army contributed significantly to accelerated economic growth.

In the context of the decline of the ancien regime, the invasion of large parts of Europe by French armies following the French Revolution of 1789 provides a source of variation in institutions that can be used as a natural experiment. The French armies abolished central institutions of the ancien regime including many feudal legacies, dues and prerogatives, ending guilds, introducing equality before the law which included freedom for Jews, and they also redistributed Church land.

The authors look at relative levels and rates of urbanization as their chosen proxy for economic growth, and they show pretty convincingly that in those regions where the French came in, broke up the guilds and smashed the power of the local aristocracies, urbanization proceeded faster than in regions that were either uninvaded, or where French reforms were revoked after liberation from the Gallic un-yoke.

West Germany, to put it bluntly, may owe a significant portion of its economic vigor to Napoleon.

At the time of the French Revolution, much of Europe was dominated by two kinds of oligarchies, the landed nobility in agriculture and the urban-based oligarchy controlling commerce and various occupations. By ancien regime institutions we mean those that maintained and benefited these groups along with unchecked royal power. In terms of economic institutions there is a close relationship between institutions inherited from the feudal era and those identified as belonging to the ancien regime ... The most basic aspect of the ancien regime was a fundamentally hierarchical notion of society where some groups or social orders had privileges, social, political and economic, while others did not. These groups were primarily the monarchy, the aristocracy and the church. These groups had different laws and rights from the general populace and this manifested itself in many important ways. For example the aristocracy was typically exempt from paying taxes while the church, which held large amounts of land, levied its own taxes, the tithe, on the agricultural output of peasants. At the bottom of this hierarchy were the peasants and urban poor whose economic and social choices were often highly circumscribed.

When I read this passage it was as if a flame lit by Voltaire himself started burning in my brain. No wonder Simon Johnson is obsessed with the emergence of a banking oligarchy that has dominated the political process in the United States over the last four decades. What we have been witnessing is the reestablishment of a hierarchically ordered society run by an aristocracy that has concentrated wealth and status and the right to demand tax cuts and deregulation for itself into its own hands. The stratification of income inequality in the United States is a clear reactionary throwback to pre-Revolutionary Europe.

The right-wingers are terrified that Obama is the second coming of Lenin. They are wrong; in the view of critics like Simon Johnson, he has been suborned by the New Oligarchs. What is needed, however, is not a Marxist upheaval, but for Obama to send the likes of Larry Summers to the guillotine and start channeling Napoleon Bonaparte. Smash the Wall Street guilds! Redistribute the holdings of the holy hedge funds! Obama's already conquered Europe, judging by last week's press reaction. Now, he must take Manhattan!

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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